Life insurance is an agreement between an individual and an insurance company that can ensure financial security to loved ones in the form of a death benefit, in the event of their death. Read on to find out what to know before purchasing life insurance:
Understand your needs
Discuss your requirements and get information about available policies from an insurance agent.
Determine how much coverage
Decide how much coverage you need, for how long, and what you can afford. Make sure you buy enough life insurance to cover the financial impact of your death on those who depend on you.
Assess Your Current Policy
If you have a life insurance policy, don’t cancel it until you’ve received the new one. The duration of the review period is defined in the contract itself. Additionally, you don’t always have to purchase a new policy to get the coverage, and depending on the policy terms you can make changes to your current policy instead.
Compare Different Insurance Policies
There are two types of life insurance policies: term insurance and cash value insurance. Term insurance has lower premiums in the early years but doesn’t build up cash values. Cash Value insurance on the other hand does and is of the following types: whole life, universal life, and variable life. Your choice should consider current and future needs and your budget.
Know about Premium Payments
Before purchasing a policy, make sure you can handle the premium payments.
Insurance Agent
Ask your agent for a yearly display of values & benefits.
Keep Your Current Policy
Do not drop one policy and buy another without a thorough study as replacing your insurance policy may be costly.
Renewal Policies
You can renew term insurance policies even if your health has changed. Each renewal can cause premiums to be higher.
Read Your Policy
Your agent can help you understand things that are unclear in your life insurance policy.
Review your Program every few years
Go over your policy with your insurance agent every few years to make sure it keeps up with any changes in your income and needs.
