The truth is death is inevitable. Preparing adequately for that day is possibly the best decision you can make for your family. A life insurance policy is designed to help your loved ones remain financially secure after you are gone.
When it comes to purchasing a life plan to help protect your family, there are several considerations to make. Everything from choosing the right insurer to selecting the right amount of coverage can make the process seem intimidating.
Luckily for you, this article shares six key factors to consider to help you buy a suitable life insurance policy for your family.
Assess your insurance needs
Life insurance needs are different and unique to each policyholder. An assessment exercise can help to determine which kind of cover best suits your family should the inevitable happen.
There are different forms of life insurance plans with each designed to help you protect various aspects of your life. The main ones include term life insurance, Whole of Life insurance, and family income protection.
Term life insurance provides coverage for a fixed duration of time. It also offers a fixed payout that’s only payable should you pass away during the contracted period.
The Whole of Life cover on the other hand, is a bit more expensive as it provides coverage for a longer duration, usually your entire life. Your loved ones are guaranteed a lump sum benefit upon your demise, which they can use towards mortgage payments or other financial obligations.
Finally, family income protection helps to replace lost income by providing monthly payments to your loved ones in the event you depart. With this cover, you decide how much your family should receive and for how long.
Buy insurance when young to save money
Insurance companies determine your premium rate by considering several factors. One of the primary factors is age.
Buying an insurance policy at a young age can help you save a significant amount of money in the long run. With this cover, the ultimate risk is your demise upon which a death benefit will be paid out by the insurer. The reasoning here is that old age comes with a higher risk of death which means your premiums will be relatively cheaper if you secure a policy when younger.
Compare different insurance companies
Insurance providers assess risks based on algorithms that generate different quotes based on the same information. This means you could get a significantly lower premium rate for the same coverage by shopping around.
When looking for a policy that meets the needs of your family, it pays to be flexible. Be on the lookout for any differences in premium rates. Regardless of how small they may seem now, it could make a significant difference in the long run.
Buy from a reputable company
Your insurance policy serves as a financial backup plan for your family when you pass away. This means that in case of any issue, you will not be around to follow it up. As such, research extensively about the insurance company you wish to use to learn more about their experience and reliability.
The idea is to work with a provider that has a good track record. Assess their claim/settlement ratio which is the metric that helps you gauge your family’s chances of getting compensated if a risk occurs.
You should also analyse the quality of the company’s customer care support. Ensure that they have a responsive and efficient team before going into business with them.
Can you afford the premiums?
An insurance policy is only viable if you can afford the premium payments. If for some reason, your payments are late or stop making them entirely, your insurance coverage lapses and your family is no longer protected.
So ask yourself, if your income or business revenue is negatively impacted, would you still manage to pay for the policy at the quoted rate?
Consider using one insurance carrier
If you’re looking for multiple life plans, we highly recommend using one provider for all your needs whenever possible. Bundling several policies with one provider may result in you getting multi-product discounts. This can help you save much in the long run.
Buying a life insurance policy that suits the needs of your family is possibly the best support system you can leave to your family in the event you depart. A plan with the right amount of coverage gives you more peace of mind as you’re sure that your family is financially secure no matter what happens to you.
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