A Few Handy Tips on Buying a Life Insurance Policy

Life insurance is a contract between an insured and insurer, where the latter promises to pay a designated amount of beneficiary upon the death of the insured person. Depending on the contract, an insurer might also have to pay a sum of beneficiary should there be any illness or accident of the insured person. In lieu of this, the policy holder has to typically pay a premium, either regularly or as large lump sum money. However, buying a life insurance may apparently seem to be easy but involves several important factors – starting from the risk cover to monthly and/or yearly premium. There are many other factors such as age, gender, profession and health that must take into account while buying life insurance.

Let us now take a look at some of the important steps that you must consider when buying a life insurance.

Understand your needs: Always remember that no one can understand your financial situation better than you. In other words, you would be the best person to determine your financial condition and hence, the best person to judge the financial protection that you would need. To get a rough estimate of the insurance needs, add the debts, estimated funeral costs, and six months to a year of income replacement. Calculating all these together will help you determine the exact amount of insurance needs, and select the right policy.

Understand the difference between term insurance versus permanent insurance: Understanding the difference between term insurance versus permanent insurance is important in order to make a proper decision about the insurance needs. A term insurance is an insurance policy that will cover most of your debt and financial problems, but in return, you may not to purchase a whole life policy. However, insurance companies make more profit with whole life insurance than term insurance, so you might get to hear more that whole life insurance is a better choice than term insurance. Nonetheless, you must buy the one that you think will best fit within your financial situation. There are certain situations where a whole life insurance can be more advantageous than term insurance. Hence, select the insurance, considering the overall financial situation.

Communicate with independent broker: Correspond with independent brokers who have access to many more products than just one firm can provide. Look around for more and more independent brokers and interact with them to collect different quotes and offers. Evaluate and calculate the offers so as to choose the best one.

Avoid quick and instant recommendations: Do not work with a broker that makes recommendations in the first meeting. This indicates that the broker has not analyzed the situation and looked for best options. So, avoid working with such broker, and keep searching for another one. If possible, you can also consult company director life insurance before making any final choice.

Ask questions: Feel free to ask questions to the advisor to clear any sought of doubt you have. Make sure that you know inside out of the product in order to make a wise decision. Ask the advisor whether the policy you choose is renewable or non-cancellable. Also, ask how long the premiums are guaranteed for. You must also ask if there is any accidental death ride and what are the exclusions.

Compare similar products: When shop around for prices and quotes make sure that you compare similar products in order to go for the best buy.

Do an extensive homework: Do the necessary homework before buying an insurance product. Ensure that the policy you choose fits within your budget, and you understand the contract. Do not sign the contract unless and until you understand all the points in the contract.

Author’s bio: Sam Payn is a renowned author, who has written a plenty of articles on how buy the best life insurance policy, types of life insurance available, benefits of using relevant life calculator and many others.

Tags: Financial services, Insurance, Life insurance, Term life insurance, Whole life insurance

Category: Life Insurance