In the United States of America, there are two types of life insurance. The first category is whole of life insurance but this is a more expensive and therefore a less popular class. The other kind of life insurance is known as term life insurance. This is more prevalent as it is a cheaper form and more flexible.
Term life insurance is the life of the insured limited to a fixed period of time. These policies do not have any cash value but a payment is made to the beneficiaries in the event of the death of the insured person. Suppose the member lives beyond the duration of years stated in the policy, then no money is paid out and the policy lapses without any claim being made.
The important thing then is to get a good rate on any policy that is bought. To ensure this a quote is required from the insurance company in order to assess whether it will be worthwhile to go in for that particular policy. It is a best practice to obtain quotes of several companies and thereby ensuring that the most beneficial policy can be bought.
There are a vast number of life insurance companies nowadays in the U.S. In a bid to out-do each other, each company tries to make their policies unique in some way or the other. As a result, there are several special features being offered in policies from different insurance companies. Due to this we see a considerable variety between the quotes from one company to another in seemingly similar life insurance policies.
Due to the above reason, it is imperative to get a good number of quotes so as to be able to compare the different features to make the correct choice. So let us go into the details of how a quote is obtained.
There are several sources of getting quotations for term insurance from insurance companies in the U.S. One can use the telephone, visit the companies personally or have an agent over to discuss options. But by and large the most popular and easy method of getting quotes is from the internet. There are many sites available on the internet where American Insurance companies give information regarding term insurance policies. A quote can be obtained by entering personal data along with selection of options provided by the company. Once this information gets submitted, a quote is sent to the potential buyer. These quotes are usually sent promptly as there is a lot of competition amongst the companies.
Before obtaining quotes for term life insurance, it is advisable to first ascertain whether it is the type of life insurance best suited under the circumstances of the insured person. For example, for an older person, a whole of life policy would probably be the most suitable; a younger person would need to have a term life insurance policy to cover the critical years from the early years of marriage to the time when the children are grown up and independent – maybe a term of 20 years.
Then again, there are different types of term life insurance. According to the different features of each type of policy, the quote will also vary. So caution has to be used to select the options of type of term life insurance while asking for a quote.
The three types of term life insurance in the U.S. are increasing term, decreasing term and level term life insurance.
In the first case, in time, there is a decrease in the death benefit payable. This type policy is particularly useful when there is a child insured. As the child becomes older, the need for coverage reduces and so the death benefit decreases. The premiums remain level.
Increasing term life insurance usually is useful for older people. The life expectancy is more in the younger years and tends to decrease with age. Therefore if a person buys an increasing term insurance policy at the age of 25 for say 20 years, then in the first few years the death benefit will be negligible. But towards the end of the term say in the 20th year, it will be highest. Premiums will increase in proportion to the increase in death benefit.
A level term life insurance maintains a constant level of death benefit. The premiums generally remain the same but can vary if provisions in the contract allow it.
Other than choice of type of policy, the quote can also be affected by other factors like the lifestyle of the insured, occupation (hazardous or sedentary), smoker or non-smoker, single or married, frequent flier, dangerous hobbies and so on.
The conclusion here is that quotes for term life insurance in the U.S. cannot be generalized. Each quotation has to be derived on the basis of the personal requirements of the insured person – personal preferences, lifestyle, circumstances, financial status and so on.