Life insurance can be quite confusing especially if you are looking to buy a life insurance policy plan for your whole family. There are so many companies and brokers selling life insurance policies that it can become quite difficult to choose the right one. Choosing the wrong kind of life insurance policy will leave you exposed to heavy loss without any compensating benefits. Here are some tips to help you decide on which life insurance policy is the right one for you:
Risks involved: Many people who take out life insurance policies do so because they want to borrow money against them. However, these policies can only be taken out once you have finished paying the premiums. Hence, it is advisable to borrow from family members before you buy insurance. Also make it clear to your family members that they cannot borrow against the policy. Make life easier by taking out life insurance loans before you buy the insurance because it’s important to understand that it’s always better to borrow from family members than from insurance companies themselves.
Number of years covered: You need to first decide how many years you want to cover your children and yourself with the insurance plans. Usually, the policies cover the entire life of the person being insured. However, you can also opt for term or endowment life insurance plans. Term insurance plans offer a lower monthly premium but you get coverage for only a certain number of years. Endowment life insurance plans offer you the same security and premium as the standard policy but you also get your money back if your family members should die during the coverage period.
Risks involved: As mentioned above, there are various types of plans you can opt for. The most popular one is called whole life insurance plans. It includes a cash surrender value, a savings element, and investments. Some other plans include variable life, universal life, limited pay and endowment. With any of these plans, you get a number of benefits and features like insurance on death, expenses, taxes, and premium protection along with some protection against debts, lawsuits, and loss of income and the rental value of the plan itself.
Policy premiums: The rates for your policy will depend upon a lot of factors including your age, gender, health, and profession. Some factors also include the type of your job. The best thing to do when shopping for life assurance is to go through a variety of agencies to get a good idea of their prices. You can find the rate and the details of the policy online. You should also look into the kind of features the life insurance company is going to offer.
Benefits: Another major factor affecting the cost of your life insurance policy is the benefits that you are going to get in return. There are a variety of policies including whole benefit, term life, universal life, and investment plans. Term life gives you the benefit for only a certain period and then the policy is terminated. The other plans offer long-term or permanent benefit and you can choose the one that works for you.
You may also want to check out if the life insurance policy will include a sum assured clause. This clause states that the insurance company will pay the beneficiary a sum assured if the policyholder dies during the promised time period. This sum assured could be equal to the surrender value of the policy, the benefit, or a combination of both. However, this sum assured should be specified in the contract and not necessarily the entire amount.
How fast can the process happen? It is best to check on how fast the claim process would be in case of a natural disaster. If it is possible to make a claim immediately after the incident, you are better off. However, if this is not possible, you should be able to make a claim at least two weeks after the incident. This would give ample time for you to properly adjust your life insurance policy and your current circumstances.