Life insurance is one of the more crucial decisions of your life. It is a great tool to safeguard you and your family’s wellbeing before any unwanted situation occurs. Nonetheless, choosing an insurance policy has never been easy, and you must know about some important aspects before meeting an agent of your choice.
The type of policy
Majority of first-time policy buyers are unaware of the various layers in a life insurance policy. They hardly know that life insurance is an umbrella word which incorporates various types of policies. Generally, the most common policies are whole and term. In contrast, people also like to invest in unusual policies like variable and universal coverage.
As a rule of thumb, Consider all types of policies which are available in the market before signing on papers given by your broker. The term life insurance is the most popular kind, as you are covered for a specific period. However, the policy provider is not obliged to pay anything if you outlive the contract. In such a case you will have to buy new insurance as not even your family will be getting death benefits.
Be realistic about your needs
Apart from the type of policy, you will also need to consider the actual coverage you need. As per our experts, you should go for a policy that provides death benefit six to eight times greater than your annual salary. The formula looks pretty good on paper, yet it’s not quite practical keeping in mind that our needs and wants could change in the future. Ask yourself, what’s the best coverage possible? Is there a chance of any improvement? Does your budget support the premium amount?
However, nobody is sure about the exact coverage they need. Thus, it is better to take a guess based on logic and calculation. Talk with your family and let your common sense guide you through this issue.
Be sure about the company
It happens that people overlook the need for choosing the best company in the market. They often go with whoever visits them first. They are not active enough to do personal research on the insurance industry. Remember, agents, do not hesitate to serve you with half-baked information which may sometimes be complete rubbish.
Make sure that not only the policy is good but also the provider has a reputable history. There are independent agencies that release rating for insurance companies based on their financial standing, legal credibility, quality of investments, etc.
Thus, you will have to make moves unless you don’t mind paying extra money on your premium.
Appoint a Nominee
A beneficiary is a person who receives the end amount of your life insurance policy. Do not choose your estate to be the beneficiary as it will make way for tax implications while naming a child is also foolish as they will not be able to receive the funds. Before naming a person, you should consult with a financial agent for the best advice.
Take your time in deciding on the insurance policy as it will control the remaining part of your life.