Life insurance is perhaps one of the best ways to protect the future of your kids, family, or loved ones. We all have financial liabilities and in case you were to get cut short by unforeseeable circumstances, having a life insurance policy in place can help secure your family’s financial future. In case, God forbid, you were to pass on unexpectedly, your insurance policy can help pay for your kid’s financial needs such as paying for college education, pay off your mortgage, cover for your family’s monthly expenses, and other basic necessities for a considerable duration of time as specified in the policy document.
However, there are various types of life insurance and policies differ from one provider to the other when it comes to the premium costs, the benefits, coverage limits, and mode of payment, just to mention a few things. Additionally, we all have different needs and financial liabilities in life and what one person can afford to pay for every month may not be affordable to another person. In short, shopping for life insurance requires one to consider a number of factors so they can make the right decision without hurting their wallets or ruining their dependents’ future. To help make the process a bit less daunting for you, here are 10 essential things to look for when buying life insurance.
1. The Right Life Insurance Type
- Whole life insurance
- Term life insurance
- Variable life insurance
- Universal life insurance
All these are different in terms of the benefits provided, costs, and other features. For instance, while a whole life policy provides death benefits and cash value, its premiums are much more expensive than term life and variable life insurance. On the other hand, with variable insurance, you can vary the amount you pay for premiums, so you can accumulate some cash in reserves from certain investments that the policy provider recommends or provides. In universal life insurance, part of the money you earn from investments can be used to cover part of your premiums. Basically, term life insurance, which offers death benefits only without cash value, is the most recommended type of policy for middle-aged individuals with fewer health risks or other life-threatening situations.
2. A Policy that Meets Your Needs
When buying life insurance, it is also important to review your goals in life to determine how much insurance you need. It’s always advisable to pick an insurance policy that will meet your needs in terms of the amount of income you earn, your financial obligations, and any liabilities that your family may be left with in the event of your death. On this note, the coverage amount, as well as, the length will also be important factors to consider.
No mistake is bigger than knowingly committing to financial obligations you cannot keep up with. Insurance experts from Insurance Hero (https://www.insurancehero.org.uk/faqs/which-life-insurance-providers-in-uk-offer-best-policies.html), a renowned London-based life insurance site, say that one of the most important things to consider when buying a life policy is to do comparisons and choose a company that offers the most comprehensive policy at the most affordable rate. In other words, affordability is one of the most important things to look for when purchasing life insurance. Before signing on the dotted line, it’s best to be certain than you can afford the premiums for the length or duration of the coverage. Also, sometimes life changes and times get tougher. When this happens, will you be able to continue paying your annual premiums? If you went for an affordable policy, you will most likely be able to keep up with the payments without violating the policy, even if it means making major budget cuts.
4. A Realistic Payout Waiting Period
Some life insurance policies are quite easy to qualify for, especially those that don’t require you to undergo medical examinations or fulfill tough qualification requirements. However, some of them have a big catch tied to the policy. For instance, your beneficiaries may have to wait for 2-3 years after your death before their benefits can be paid out 100%. This can be really frustrating, especially in the case where you were the sole breadwinner. It’s best to pay more or undergo tough approval procedures with a policy that assures you of immediate payout (or within a matter of days) of death benefits upon your demise.
5. Living Benefits
Thanks to competition in the insurance industry these days, some policies even allow you to tap into your life insurance while still alive. For instance, some allow you the option of receiving payments in the event of chronic illness or disability. Some also give you the option of claiming your paid premiums after a certain period of time, say 25 years, if you ever find you no longer need life insurance. This can be a great feature to look for when shopping for a life policy.
6. Underwriting Leniency
Depending on the company you approach, some insurance policies will lock you out or charge you a higher price based on risk assessment. Things such as family medical history, chronic illnesses like diabetes, traveling to high-risk areas, and practices such as smoking may be considered high-risk. They hurt your wallet badly when purchasing insurance. However, there are still insurance companies with packages that can show leniency and accommodate your situation without the costs having to skyrocket.
7. Payment Convenience
Missing payments for a life insurance policy can be a really tricky situation. For most packages, the provider may cancel your policy if you fail to make your premium payments within the specified period of time. But sometimes it’s in human nature to forgetful. Even though most policies will give you a grace period of 30 days or so, it is best to pick a policy that provides you with a wide range of payment options, including the convenience of setting up automatic bank drafts or standing orders, especially for term life insurance. This way, it can be easy to avoid the frustrations that may come with missed bills or payments.
8. Provider Reputation
Last but not least, as hinted earlier, provider reputation is one of the most important things to look for when shopping for life insurance. There’s no point in putting your trust in an insurance company that is deemed to collapse after a few years of operation, yet your family’s financial future depends on it. Shop wisely and do some thorough homework before buying your life policy from company so and so.
We never know what tomorrow brings or comes with. Future events are uncertain and one of the best ways to protect your family’s financial future is to purchase a good life insurance cover. Not all life insurance covers are equal and picking the best one for you can be a tough call. Thanks to the pointers above, however, you now know some of the crucial things to look for when picking a life cover for you and your family.