Taking out life insurance is an essential step since, in the event of premature death; this protection could have a decisive effect and allow your loved ones to cover the various costs related to your death and your obligations without having to change their standard of living.
Due to the importance of the subject, we will summarize here 6 aspects that you should take into consideration before purchasing life insurance.
1. Think about why you are looking for life insurance
Life insurance is designed for the person who wishes to “guarantee the economic stability of their family in the event of his death or the lack of income caused by a disability or an illness that prevents them from carrying out tasks that generate income. Index universal life is a variant of a typical life insurance policy that could meet your needs.
Taking this into account, purchasing life insurance should provide peace of mind.
This would be the main one; however, there are also other reasons such as guaranteeing the union of the family nucleus in a situation of death, having a programmed savings plan, covering study expenses of the children, among others.
2. Evaluate the sum insured
It is important that you make sure that the insurance coverage is equivalent to your family’s expenses for up to 3 or 5 years. Well, this is the approximate time that it would take them to have a financial balance in case you are no longer there. It is also very important to choose a no exam life insurance policy which has no waiting period.
3. Choose coverages of your interest.
It is important that when choosing life insurance, it has the coverage of your interest. That is, make sure that with the plan and policy you select, you effectively provide security to your whole family in any situation. So read absolutely everything that includes and does not include the insurance you choose.
4. Evaluate the insurance policy
Before hiring any type of insurance, it is important that you evaluate the terms and conditions of the policy. Remember, that some life insurance policies are intended to provide financial support to the family after you die; on the other hand, there are others that are made to be for your own benefit, and you can collect an income or capital sum at maturity date.
For this reason, it is vital that you know what type of policy and term is best for you according to your situation. Consider taking financial advice, as this is a complex area and the tax impact of different policies can be wildly different. For example, some investment policies attached to small life insurance policies can be capital gains tax-free provided they are a qualifying policy and meet various conditions.
5. Think about who your beneficiaries will be
It is important for you to know that you can change them whenever you want if we put revocable beneficiaries. But this issue is addressed to single parents who list their minor children as beneficiaries. It is important to know that minors under the age of 18 cannot use inheritances until they reach that age.
If you have a small child and want to protect it well, you must assign a beneficiary greater than your trust in the policy and give it a specific percentage and the other percentage that the child has after 18. Or you can assign 100% to the child and, in the same policy, assign a guardian or legal guardian.
6. Check well which insurer you are going to hire and who is the agent who wants to sell you the policy
This issue is very significant since it is subjective that a lot of money and protection is lost or gained. Here are some examples:
- There are companies that only sell term life insurance and do not offer permanent.
- Others have higher prices than their competitors (in this case, the high cost of the policy does not affect quality but rather pays the high operating costs of the company).
- There are many insurers that do not have living benefits on their policies and only protect against death. This life coverage is provided by a few powerful insurers that keep their prices low even while paying in life.
Not all insurance agents are honest. Many think of their commission and not the welfare of the client. You can quickly appreciate him in his aggressive sales methods and when he tries to direct you to a certain product.
Once you buy life insurance and know you are protected, it will be easier for you to focus on your plans for the future. You do not know where to start? Don’t hesitate to meet with a financial advisor to make sure you get the ideal protection for your needs. Know that you are never too young to purchase this type of insurance. It is indeed very advantageous to obtain life insurance at a young age since the cost of your premium will be advantageous.