A guaranteed death benefit policy is one in which there is a minimum sum payable on the death of the insured. The guaranteed death benefit makes this policy irresistible for some. So if you are planning on buying a guaranteed death benefit life insurance policy, here are a few things you should consider.
First of all check the policy language and determine the consequence of a missed premium payment and the means of determining whether a policy has been paid on time. Most insurance agents do not discuss or understand these points and, intentionally or not, give false or misleading reassurance. The terms of such policies are generally designed to cause the high level of policy lapses that will be required for these policies to be profitable to the companies issuing them. Check the insurance company’s financial ratings. Like with all life insurance policies, shop around. You may be able to get policies with death benefits 15%-30% greater than the guaranteed products offered by the first insurance company or agent you contact. Without comparing the different products, you will miss out on huge amounts in eventual death benefits. Most of these guaranteed death
benefit policies pay extremely high commissions to selling agents. A guaranteed death benefit policy that starts with a comparatively lower premium that increases in later
years may, in some cases, offer a significant savings over a level premium.
Calculating the amount of guaranteed life insurance coverage you will need can be a tricky business. Many people mistakenly underestimate the amount of coverage they require. Instead of thinking of the guaranteed life insurance death benefit as a nest egg that must last the beneficiaries for a number of years, most people sometimes think of the benefit as a type of windfall. Remember, a death benefit is not a windfall; it’s your guarantee that your spouse will be able to make his or her mortgage payments, your kids will be able to go to college, and your family will be able to live in the manner to which they’ve become accustomed–at least for some time. All whole life insurance polices are guaranteed death benefit policies. Many companies offer term life insurance policies with guaranteed death benefit. Buying a term life insurance policy is generally the cheaper option. You will get a guaranteed death benefit at the lowest cost possible with term life insurance. Guaranteed universal and variable insurance programs offer guaranteed death benefits for a given period and premium and can be guaranteed for your entire life.
