Six tips for buying life insurance

Buying life insurance for the first time can be a daunting task for anyone. Finding the best provider to fit a person's needs, filling out all the paperwork and satisfying all the requirements can be quite scary for many people. Luckily, there are several time- and money-saving tips that a person can utilize while buying life insurance.

1. Quit smoking before purchasing life insurance

The simple fact of the matter is that smoking greatly raises the mortality rate for people who partake in the activity. The health risks of smoking are great, and smokers will find that their life insurance premiums will be much higher than those who are smoke free. Most life insurance providers will evaluate each case individually, taking into account the amount of tobacco used, current health problems caused by smoking and length of time a person has smoked. Life insurance providers will also evaluate the length of time a person has been smoke free, so it is a good idea for a person to give up the habit at least 12 months prior to purchasing life insurance, in order to save themselves from an increased premium.

2. Purchase life insurance early, rather than later in life

For many people, buying life insurance in their younger years seems like a waste of money. The truth of the matter is that the younger a person is when they purchase life insurance, the less their premiums will be.

Besides saving a person money, buying life insurance at a young age also increases the likelihood that they will be accepted by an insurance company. Insurance companies are allowed to deny life insurance, and the truth of the matter is that as a person ages, it becomes less profitable for an insurance company to cover them.

In addition to life insurance, younger individuals will benefit from purchasing accident insurance at an earlier age. Most companies will guarantee acceptance for individuals ages 18 to 35.

3. Understand the different types of policies

There are three main types of policies available to people who wish to purchase life insurance. Understanding what each policy entails will help a person choose the best option for themselves and their family.

Term life insurance - provides life insurance for a specific number of years. This is usually the least expensive type of life insurance and is a great insurance choice to protect against premature death. Term life insurance provides insurance only and doesn't have a cash value or pay dividends.

Whole life insurance - provides life insurance for a person's entire lifetime, as long as they pay their premiums. Unlike term life, whole life builds cash value. Each year, a whole life policy will be automatically renewed, regardless of health.

Universal life - provides permanent life insurance and allows access to cash values. Universal life is more customizable than whole life and allows purchasers to tweak the amount of protection provided and premiums as they see fit.

Regardless of which type of life insurance policy you choose, you may also benefit from funeral insurance to cover the expenses of your funeral plans.

4. Speak with an independent broker

Independent brokers will have more policy choices at their disposal than one firm will provide. Using an independent broker increases the chance that a person will purchase the best life insurance available.

5. Watch out for expensive riders

It's important for a person to realize that insurance is a business. Any company or broker attempting to sell a person life insurance is trying to turn a profit. One way that life insurance companies make more on a policy is by selling people riders. Basically, riders are policy add-ons that "sweeten" the insurance policy. It is best for a person to reject these riders, unless they fully understand the cost and benefits associated with purchasing them.

6. Always purchase life insurance from a large and well-known provider

Buying an insurance policy from a well-known insurance provider will greatly increase the chances of a full, hassle-free payout. When a person buys a policy from an unknown insurance provider, they can't always be sure of what they are going to get. Larger insurance companies provide a greater "insurance" that the entire process will run as smoothly as possible.

Courtesy of ARAcontent