Confused on your options for life insurance? Here are some tips for first time buyers.

For many Americans, buying Life Insurance is one of the most important financial decision that they will make in their lives, yet many feel overwhelmed by the complexity and broad range of options available.

Prospective buyers tend to get confused by different policies, their terms and conditions and whether they are from reputable brands, how much they are offering, and myriad other factors.

Recognizing what a significant decision you’d be taking and the effect it might have on your or your family will require you to pay attention.  Study policies, offerings, terms and clauses, this could mean the difference between a comfortable life for your family or not, imagine taking life insurance. You having a thorough grasp of this will help you know how much protection you need and in what areas of your life too, e.g. health, property, business insurance e.t.c. 

This article is aimed at educating you with knowledge to help you as you buy insurance (whatever type you buy) for you and those who you cater for.             

Coverage comes in different types, it’s something we already know. So make sure you get sufficient insurance protection. You need your family to be well catered for in the event that you’re no longer on the scene. In the same vane, you should do this with some knowledge so that you don’t purchase insurance that you don’t need, neither should you pay more than you should, and most importantly, you shouldn’t under-insure yourself.  

1. Freelook option

Lots of insurers in a bid to satisfy their customers offer trial periods which they call freelook options. So basically, here’s how it works; you’ll get some days to rescind on your decision to buy a particular offering from an insurance firm. This is of course after you’ve taken out the time to understand all that agreement entails. During this freelook period, you can change some of the details of the agreement; you could also totally cancel it if you choose. You should, however, know if your insurers have this offering and also how many days it is. don’t be nice about this, if you have doubts certain parts of the agreement seek to change it or do away with the policy agreement completely, 

2. Look Around 

No matter how much impressed you are about the offering of a certain insurance provider or how much you trust them, make sure you check what other companies have to offer. Check out the financial implications of the agreement you are planning to get into. Check out what other companies can offer at that price point, or how much you’d have to pay for the kind of coverage you want from several companies. Basically, compare and contrast what several companies have. 

If you’re going for life insurance you should determine if you’d prefer term insurance or permanent life insurance. The basic difference between these two is duration. For term insurance, you’ll not be eligible to claim damages if you pass a certain age. On the other hand, life insurance will be valid until death or a claim has been made.

Term insurance is preferable for most buyers. To easily get estimates, you should check out a marketplace for insurance such as PolicyGenius

3. Cost of insurance premiums

Once you buy your insurance you should regularly service your payables. Timely payment is essential to keep your policy active. 

When you select the product and the premium, seek to understand how much stress it will put on your personal finances, particularly if you were to hit a financial rough patch. 

If insurance payables for your life represent more than 10% of your monthly income, then you will have a very hard time fulfilling your part of the deal in event that you lose your job. 

In most agreements, failure to make payments could make your agreement get cancelled and the money put in will bot be refundable. Worse still, the insurer may choose not to restore your agreement, meaning that you might need to apply again and get requoted.  This is why it is recommended that you get your life insured as early in your life as you can (as long as have reached financial stability) because once you contract the policy you can generally lock in your payment amount for the rest of your life 

We strongly recommend that you use your insurance company’s auto-debit function so that you can pay your premiums automatically. 

4. Purchase All-inclusive Coverage

Protect yourself from risks including Disability, Critical illness, death by going for a comprehensive policy. 

5. Review The Agreement regularly

Nothing stays the same. The insurance agreement that a 30-year-old will purchase might be quite different from that which a fifty-year-old fellow might purchase. The older fellow is about to leave the workforce, that has to be put into consideration. Hence keep in mind to re-evaluate your policy at regular intervals to makes sure that you are covered according to your current situation. Therefore as times in your life change, it only makes sense for you to make sure your policy does cover that stage of your life.

6. Disclose everything 

For those who suffer from some illness or a genetic disorder, be forthwith with your medical history, this is even more vital if you’re looking to insure your life. It would cost you more, most definitely, but at least you’d be sure that your family will be properly indemnified in case of your demise. If they smell a rat, they could refuse to compensate your family, and of course, all of your efforts would have gone down the drain. 

Insurers spend millions of dollars per annum on fraud detection, there’s a huge possibility that they will uncover any omissions or misleading statements 

7.Determine coverage amount based on your family’s needs

Keep your family in mind as you are determining what your coverage needs are.

You need to purchase coverage that will pay everyday bills of your near and dear ones, and that will pay off any debts that you currently have that your loved ones will inherit.

Assess the amount needed to sustain your current lifestyle along with taking into account a  change in economic conditions like inflation. Inflation means that whatever amount you need today to cover all your needs, will likely not be enough to cover all your needs in the future.

8. Always go for a reputable life insurance company

Your life insurance policy is to financially help your family members when you are no longer there. It’s important to select a company with a good reputation in the market, having good reviews and feedbacks including good customer service, good claims history, and a strong balance sheet.

9. Do not rely on life insurance from your employer

Many Americans only have a life insurance policy provided by their employer.

Not only do these policies generally offer very little coverage (something along the lines of 1 year’s worth of salary), but the policy does not stay with the person should they switch jobs or even worse, lose their job. 

Still confused about your Life Insurance policy? Choose an advisor who has the right knowledge and can answer all your queries. A good advisor will help you to find the perfect policy as per your need.

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