Massachusetts Life Insurance
Buying Massachusetts life insurance goes beyond just pricing the cost of coverage and selecting the lowest premiums.
When you buy an important financial product that acts as a buffer of protection for your family when you are unable to protect them yourself, you need to be sure that you are buying the right type of life insurance plan, the right coverage limits and the right life insurance riders all from the most reputable carrier.
The idea of doing all of this research may be overwhelming, but in the end, you will be happy that you made the effort to inform yourself before you starting building your financial planning portfolio.
One of the great things about technology is that you do not have to take the life insurance shopping journey by yourself. There are loads of guides and resources that you can access online that will help you make the right decisions while you get answers to questions you may have never even thought to ask.
This guide to Massachusetts life insurance has compiled information from across the web and turned the complicated details into content that you can fully understand and relate to.
Read this guide, and learn everything from how to select the right type of policy to how to find the best carrier in the state.
What types of life insurance can you choose from in Massachusetts?
There is more than just one type of standard life insurance that you can buy. Before you really can shop for coverage, you will need to learn about the principal types of coverage and what differentiates one type from another.
There are two primary types of insurance: term and permanent life. Under each different main category of insurance, there are subcategories.
If you purchase a term life insurance policy, you can choose from renewable level terms and annual terms that do not have level premiums. If you select a permanent life insurance policy, you can choose from traditional whole life and universal life, or a variable plan.
Each of these policies has its advantages and drawbacks. The key is to learn about the characteristics of each so that you can match a plan to your needs.
Term Life Insurance
Term life insurance is a product that will stay valid for a specified period of time.
The period of time that the insurer is financially obligated to pay a claim in the event of your death is called a term. When you buy a term insurance policy, you can decide if you want the term to last for one, five, 10, 20, or even 30 years.
During that time, the premiums can either stay level or rise as you get older. The death benefit almost always stays level unless you buy a decreasing term.
At the end of the term, you no longer have the protection and you are not entitled to receiving premiums back unless you add on a special and expensive return of premium rider. The most popular term policies are:
– Level term insurance
Level term insurance has a level death benefit and level premiums for the entire term.
The premiums will be based on your age at the time of the application and will not go up as you age. When your term ends, you can requalify for coverage by taking an exam or answering medical questions. If you do not qualify for coverage, you will need to find an alternative to a standard term policy.
– Annual term insurance
Another option that is not nearly as popular as a level term is an annual renewal term.
These premiums for an annual renewable term are based on your age at the time. As you get older and your term comes up for a renewal, you can renew the policy but you will be charged higher premiums. This is because you are considered a higher risk as you get older.
An advantage of an annual term is that you typically do not need to medically qualify because these plans are not fully underwritten.
Permanent Life Insurance
In Massachusetts, you also have the option to buy permanent insurance. Permanent plans, which are also called cash value plans, are policies that include a life insurance component and an investment component while offering you lifelong protection.
The policies will accumulate tax-deferred cash values, making them an attractive option for people who want protection but also want to invest their money in smart vehicles.
As long as you qualify for coverage and you make the payments towards your policy to keep it funded, you will have the peace of mind in knowing your family will always have some financial help when you are gone.
There is more than just one type of permanent life insurance, and this is what confuses a majority of people who are comparing the two products. All of the plans have a cash value feature, but the structure of the policies and how premiums are paid do differ. Here are the most popular options:
– Whole Life
Whole life is the original type of permanent insurance that makes carrying permanent life simple and straightforward.
When you buy a whole life plan, the premiums will be collected based on your age at the application. The rates will stay the same for the rest of your life if the death benefit stays the same. The money that you pay into the policy will go towards life insurance, fees, and your cash account.
The account will earn interest and the money will grow over time. It can be accessed or stay in the account depending on what is important to you.
– Universal Life
Universal life is a more complex cash value policy that will offer you greater flexibility in the future. Instead of paying a fixed amount, this policy lets you change your funding so that you can cover the life insurance expense and invest a certain amount of money in your cash account.
The account will earn interest at a rate the fluctuates, and the higher the interest the more the account balance will be. It can get complex because you need to be sure you are funding the policy adequately for it to stay active.
You should work with a good agent or a financial adviser before you decide that this is the right policy type.
How to Select the Right Type of Insurance
You really need to decide what your current and future life insurance needs are before you select a plan. Term life insurance is the most affordable policy type, but it is most suitable when your needs are temporary.
If you are buying coverage on a budget to cover your debt and to pay for dependent care or education costs, then a term plan is just right. If you have permanent needs and want lifelong protection to event a scenario where you will be uninsured, a cash value plan is right.
Some permanent needs include paying for estate taxes or passing an inheritance on to your loved ones.
How to Choose the Right Death Benefit
You may be limited in the amount of coverage that you can buy, but most insurers only restrict you from buying exorbitant coverage when you do not have a high income.
You can generally buy as much coverage as you need, but determining how much coverage is sufficient can be hard. This is because events change your needs and you never know what can happen in the future.
You need to ask yourself the important questions to find the appropriate limits.
You also need to consider how much you have saved and how much insurance you have through work. There are some industry rules that say to multiply your income by three, five, or 10 times to find the right limits, but these rules do not always work.
Instead of using these rules, it is best to use a detailed calculator that helps you input all of the important factors.
How to Choose a Life Insurer
You need to protect your interests when you are buying life insurance. This is why you should buy your coverage through a company that is licensed by the Massachusetts Department of Insurance.
As long as you choose a licensed insurer and you check into financial ratings, you will know that you have an agency that protects you as a consumer.
It does not have to be a long process to price the cost of life insurance once you know what type of insurance and how much you need. If you want to price policies, you can request quotes online through a rating tool that instantly shows you how much Massachusetts carriers will charge.
Be sure to compare the premiums and find a company that has fair pricing for applicants in your rating class. After you find the best price, you can start the insurance application process.