Buying life insurance can be a very daunting task to tackle. If you’ve never dealt with it before then all the new, complex terms can really throw you off, not to mention all the amount you’ll come across the subject of your own death! However, if you can take an organised approach, sorting out your life insurance can be remarkably simple. Here’s some simple pointers to nip your insurance in the bud.
Before you get a single quote, it’s important to ask yourself why you’re actually getting life insurance. Getting a life insurance policy is a massive investment, and you should never do it just because you saw an ad that scared you into it. You may be surprised to hear this, but not everyone actually needs life insurance. The purpose of this kind of insurance is to make sure your dependants get financial support after you’ve passed away. If you don’t have any dependents or your last one is about to fly the nest, then you probably don’t need to buy a life insurance policy. Similarly, if you’re a significant financial cushion to someone in your life, and there will be certain gaps when you die, you’ll only need a policy that will cover those gaps. Understanding how much if any insurance you need is an important first step before you start shopping around.
So, if you’ve decided that you do need life insurance, the next big thing to understand is what kind of policy you want. With life insurance, there are only two main types of policy: term life and whole life. Term life policies are the cheaper of the two options, mainly due to the fact that they usually expire before the benefits are paid out. Whole life insurance policies are more expensive, but come with a certain advantage over term life policies. When you take out a whole life policy, it will last from the day you take it out to the day you die, no matter what happens in that interval. The coverage could last a year or several decades, and the insurance companies need to turn a profit! Furthermore, whole life policies can be borrowed against with a high interest rate, which is pretty hard with term life policies. Remember that you may need to dig a little deeper if you have any pre-existing medical conditions. You can read more on here: www.genesage.com/pre-existing-conditions .
Finally, make sure you know how much you actually need to buy. You may have read a few “rules of thumb” on blogs and leaflets from insurance companies. My advice is to take these with a pinch of salt. Everyone’s life insurance needs are different, and these kinds of guidelines are often geared towards getting you to buy more expensive policies. Your decision should only depend on one factor: the potential needs of your beneficiaries. Consider the ages and financial independence of all your beneficiaries, and use this to work out how much money they’ll need and for how long. Nobody can give you set rules for getting the best insurance for the lowest price, so make your own! When you tailor your life insurance to each of your dependents, you’ll have nothing to worry about now or in the future.