In our last blogpost, we discussed the types of life insurance products, now second consideration.
Riders and Convertibility Considerations
Beyond basic price are other factors to consider when shopping for a policy. For instance, there are some additional benefits, often referred to as “riders,” that you may want to add to your policy.
One is the disability waiver premium rider. This benefit waives your premium and keeps your life insurance in force if you were to become disabled and were unable to work. Look closely at this rider when shopping, because some companies offer very competitive basic policy rates, but their rates for benefits like waiver may not be that competitive.
Another feature that you may want to consider is buying a term policy with an option to convert the coverage to permanent life insurance at a later date. Many policies offer some type of conversion option. But you should consider which permanent policies you can convert to and how many years you have to decide if you want to convert. Some companies limit the policies you can convert to and exclude their most competitive products, or they have very short conversion periods.
Convertibility is important for a couple of reasons. First, term life insurance only provides coverage for a limited period of time. Your coverage may run out when you still need life insurance. When that happens, you may decide to get a new term insurance policy. But you will be older, so your premiums will be higher.
In addition, if you have developed any health issues, you may not be able to get coverage at an affordable price. Converting some or all of your term life insurance to permanent coverage can help ensure that you have coverage that you can keep for as long as you need it. In fact, it may make sense for you to buy some permanent life insurance while you are young, just because it is far more expensive when you get older.
Another reason that a conversion option is important is if you were to become disabled. If you are permanently disabled and you have waiver of premium on your policy, you can convert your term life policy to permanent coverage, and with many companies the premium for the permanent coverage will be waived.
Another thing to consider is the quality of the company you are buying your policy from. Reliable life insurance companies are generally rated on financial strength by several ratings agencies. These include A.M Best, Moody’s Investors Services, Fitch Ratings, and Standard & Poor’s. Financial strength ratings are a key indicator of a company’s ability to meet its financial obligations. Look for a company that has solid ratings.
You might also consider how policyowners (and beneficiaries) rate their service. Many good companies have some type of customer service ratings or awards.
In our next blogpost, we will discuss how to buy life insurance.
Riders and Convertibility Considerations
Beyond basic price are other factors to consider when shopping for a policy. For instance, there are some additional benefits, often referred to as “riders,” that you may want to add to your policy.
One is the disability waiver premium rider. This benefit waives your premium and keeps your life insurance in force if you were to become disabled and were unable to work. Look closely at this rider when shopping, because some companies offer very competitive basic policy rates, but their rates for benefits like waiver may not be that competitive.
Another feature that you may want to consider is buying a term policy with an option to convert the coverage to permanent life insurance at a later date. Many policies offer some type of conversion option. But you should consider which permanent policies you can convert to and how many years you have to decide if you want to convert. Some companies limit the policies you can convert to and exclude their most competitive products, or they have very short conversion periods.
Convertibility is important for a couple of reasons. First, term life insurance only provides coverage for a limited period of time. Your coverage may run out when you still need life insurance. When that happens, you may decide to get a new term insurance policy. But you will be older, so your premiums will be higher.
In addition, if you have developed any health issues, you may not be able to get coverage at an affordable price. Converting some or all of your term life insurance to permanent coverage can help ensure that you have coverage that you can keep for as long as you need it. In fact, it may make sense for you to buy some permanent life insurance while you are young, just because it is far more expensive when you get older.
Another reason that a conversion option is important is if you were to become disabled. If you are permanently disabled and you have waiver of premium on your policy, you can convert your term life policy to permanent coverage, and with many companies the premium for the permanent coverage will be waived.
Another thing to consider is the quality of the company you are buying your policy from. Reliable life insurance companies are generally rated on financial strength by several ratings agencies. These include A.M Best, Moody’s Investors Services, Fitch Ratings, and Standard & Poor’s. Financial strength ratings are a key indicator of a company’s ability to meet its financial obligations. Look for a company that has solid ratings.
You might also consider how policyowners (and beneficiaries) rate their service. Many good companies have some type of customer service ratings or awards.
In our next blogpost, we will discuss how to buy life insurance.
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