There are several features you should look for when
evaluating a term life insurance policy. Here are some tips, from
"Personal Finance for Dummie$" (IDG Books Worldwide Inc.,
Foster City, Calif.):
1. Frequency of premium adjustments.
You can choose an annual premium that will remain
fixed for the life of the policy or an adjustable plan that calls for
payments to go up at certain intervals (such as once every five
years). A fixed premium ensures that your payments will remain the
same, and you won't have to go through medical evaluations as
frequently to get the best rate. But you'll pay more for the policy
in the early years than you would if you selected a plan with an
adjustable premium. And if you want to change your amount of
coverage, you'd be throwing money away if you dump a policy with a
long-term premium guarantee.
2. Guaranteed renewability.
This feature guarantees that the policy cannot be
canceled because of poor health. Insist on it.
3. Insurer's financial stability.
Favor a company that gets top ratings from
insurance-rating firms. You can find ratings from all the major
rating companies by visiting our Insurance
Company Rating page. State regulators or even other
insurers often come to the rescue when an insurance company fails,
but there's no sense in taking unneeded risk.