Reliable life insurance covers a wide range of financial obligations, from paying the mortgage to covering the cost of education. It also helps ensure that loved ones aren’t left struggling after your death.

To find the best life insurance company for you, look at the company’s customer reviews and financial ratings. Companies with superior financial strength ratings are more likely to pay out claims in the future. Learn more!

Term life insurance

Term life insurance is a simple, affordable option that can help your family cope with the financial effects of your death. It provides a death benefit that is tax-free* for a set period of time, and premiums remain the same throughout the policy term.

Unlike other types of life insurance, it does not have an investment component, so you can get a larger death benefit for a lower premium dollar. Term life is also a good choice for those who cannot afford the higher premiums of whole-life coverage. Moreover, you can convert your term life insurance to permanent coverage later on. But that may come at a cost.

Whole life insurance

Whole life insurance is a type of permanent life insurance that covers you for your entire lifetime. It features a level premium and death benefit, and it can also include a savings component that accumulates cash value on a tax-deferred basis. Some whole-life policies called participating policies, pay dividends that you can use to reduce the premium.

This option may provide financial security for families who rely on the income of one breadwinner, as well as a guaranteed death benefit. It also allows you to designate contingent beneficiaries and a trustee. It’s a good idea to review your beneficiaries once a year.

Universal life insurance

Unlike whole life insurance, universal life offers the ability to pay more or fewer premiums based on your financial goals. Unlike whole life, it also has the potential to build cash value. These gains are income-tax-free. However, there are administrative fees that can offset your gains. These charges are deducted monthly from your policy’s cash value.

Like a savings account, UL insurance accumulates cash value that earns interest at market rates or a minimum rate. This money grows tax-deferred, and you can borrow against it. If you don’t want to keep your UL policy, you can surrender it for a portion of its cash value minus any surrender charge.

Additional riders

Additional riders are an effective way to customize your life insurance policy. For example, a waiver of premium rider allows you to avoid paying your insurance premiums in the event that you are seriously injured or sick. However, it is important to note that these riders may come at an additional cost.

Some riders are free, but others can significantly increase your premium. To find out if a rider is worth the extra expense, weigh its benefits against its cost. For instance, an accidental death and dismemberment rider could be helpful for those who work in dangerous occupations or engage in risky hobbies.

Non-smoker discount

Smoking tobacco, including cigars and smokeless tobacco, has been shown to cause serious health problems. It also increases the risk of fire in your home, so many life insurance companies consider it a high-risk activity and give smokers higher rates than non-smokers.

MoneyGeek’s Take: Generally, most life insurance providers only consider you a non-smoker if you’ve not had a cigarette in the past year. 

It is important to be honest when answering questions about your smoking history. Providing incorrect information could result in your application being declined or your rate being increased. Check this important info.