June 30th, 2021 | Updated on June 29th, 2022
A life insurance policy is a great way to protect your family from life’s uncertainties and ensure that they maintain a good standing even in your demise.
Therefore, it’s important to take the task of buying life insurance seriously as different insurance companies provide different benefits and add-ons.
The first step in buying life insurance is to get conversant with the basic terms, and the next will be deciding which policy has the best products that fit your requirement.
This is where the challenge lies for many people, so, on that note, here are four things you should consider when buying life insurance.
1. Understand Your Insurance Needs
In simple terms, your insurance needs should answer your “why’s.” For example, why do you need life insurance? Is it to help your family repay debts and meet expenses? Or Is it for a period of time to help with the mortgage or your kid’s tuition? Answers to these questions will help you determine the type of coverage that will be most beneficial.
Once you can determine your coverage, the next step would be to ensure the insurance company you have in mind makes sufficient provision for this coverage.
For instance, the Allstate life insurance company of New York, a subsidiary of Allstate life insurance companies (ALIC), has a wide range of insurance policies, from universal life policy to term life insurance policy.
In addition, Allstate’s life insurance company has positive, meaning you will be in good hands with this insurer.
2. Think About Your Budget
After evaluating your life insurance needs, you’ll need to assess the insurance’s cost in terms of the premium.
You’ll also need to know if you have the financial strength to pay throughout the policy term’s duration.
Relatively speaking, permanent life insurance tends to be more expensive than term life insurance, so term insurance will be more convenient if you want a cheaper and affordable premium.
However, unlike a permanent insurance policy (which lasts for the duration of your life and maintains a fixed premium), term insurance typically lasts for ten to thirty years.
If you choose to maintain the policy, a new rate will be calculated. Where you prefer the benefits of permanent life insurance but can’t afford the premium, you can opt for universal life insurance.
This insurance type offers flexibility in both the premium and death benefits, and it’s considerably cheaper than term life insurance.
3. Evaluate The Future Of Your Policy
Evaluating the future of your policy means going through the fine prints of your insurance policy.
You need to understand everything it covers, including its exclusions, which are events that aren’t recognized by the insurance policy.
It’s crucial that you know the exclusions before buying the policy to avoid leaving your loved ones in a lurch.
Admittedly, this process can be exhausting as you may not fully understand all the insurance jargon.
So, feel free to talk to someone trustworthy or get the help of an insurance agent to guide you through the process.
An insurance agent has the training, experience, and expertise to offer advice and ensure that you make the right decision.
4. Research On The Insurance Company
Buying life insurance is a major investment and requires the same amount of effort and scrutiny that you would apply to buying a car or taking up homeowners insurance.
Therefore, just as the company wants to verify your insurability, you should also research its capability and history to ensure that you’re in good hands.
Besides, this is easy to look up, thanks to rating agencies like the National Association of Insurance Commission and Fitch ratings.
A good place to start is their claim settlement history. You can get this online from sites like the IRDAI, which provides claim-related information to the public.
Make sure you check their rejected claim history to know the reasons behind them to determine if the insurer is worth using or not.