When it comes to buying an insurance plan, there are many things which one needs to look into, especially, if you are buying it for the first time. Like every new experience, the process of purchasing a life insurance policy might appear intimidating and confusing.
Which is the best plan to buy? Where should I buy from? Do I really need insurance and why? How should I choose a plan? These are a few questions that will come haunting.
Here are a few tips that will help you in buy a suitable plan.
Your Insurance Needs
Carefully assess your insurance needs before buying an insurance plan. The cost of a plan will depend on variables such as your heath, age, amount of coverage you want, etc. Furthermore, these factors will play a major role in choosing the appropriate life insurance plan for you.
Choosing The Beneficiary
It is essential that a beneficiary is someone worthy of your trust. Therefore, better take time to contemplate and decide who you want to nominate because the beneficiary should be kept informed about your insurance plans and its prominent features.
Deciding On The Amount Of Coverage
There are many factors which can help you decide on the amount of coverage you need. This includes your civil status, your health status, retirement plans, debt which your family will have to pay for in case you pass away, number of dependents and other financial matters.
There is no point in hiding a few facts or distorting the truth to get a lower rate. At the time of the claim, the insurance companies do carry out detailed checking, which will reveal the truth eventually. If caught with discrepancies, this may lead to complications and unwanted disparities with the insurance company.
Clarifying The Renewal Policy
Most of the term insurance plans can be renewed for one or more terms. However, the amount of premium may increase when you opt to renew your plan. Before buying a policy do check the age limit until when you can renew the policy. It is also advisable to get an idea on the premium in case of policy renewal.
Reading Your Policy Carefully
Do premiums or benefits vary from year to year? How much do the benefits build up in the policy? What part of the premiums or benefits is not guaranteed? What is the effect of interest on money paid and received at different times on the policy? These are all questions that you should be able to answer by asking your agent, calling the company, or thoroughly reading your policy.
Comparing Different Kinds Of Insurance Plans
Are you looking for a broader coverage period or an affordable premium? Decide on which kind of plan you would like to purchase. For example, you can choose between a permanent insurance plan and a term plan. In simple terms, term plans offer you cover for a stipulated period of time while permanent insurance offers coverage as long as you are paying the premiums, and has a cash value attached to it.
Life Insurance Riders
Insurance policies do not follow the one-size-fits-all approach. To meet disparate investor needs, companies offer add-ons that can be availed over and above your policy. These add-ons are called riders. You can avail riders for critical illnesses like heart attack, for death by accident, for income benefits, etc. Make sure you ask about these at the time of purchase.
Ensuring You Financial Stability
It becomes very important to pay premiums on time. Be aware of your economic situation once an insurance plan is bought. Carefully evaluate whether you will be able to pay premiums on time and whether you will be able to bear the charges if in case the premium amount increases. Based on these questions, you should fix the amount of your premium.
Evaluating The Future Of Your Policy With An Insurance Agent
If you are buying insurance that builds up cash, have your agent check how quickly the cash value grows. Some policies have low cash values in the early years that build quickly later on. Other policies have a more level cash value build-up. Ask your agent for a year-to-year display of values and benefits.
Buying From A Reputable Life Insurance Company
Your life insurance policy is meant to financially protect the people you love when you are no longer here to do so yourself. Do some homework on the life insurance company that you are considering buying from.
Reviewing Your Life Insurance Plan Every Few Years
How will inflation affect your future needs? Do you need more insurance when your family size increases? Do you need more now that your business has grown? Review your policy with your agent every few years to keep up with changes in your income and needs.