Facts You Need to Know About Life Insurance

22
February

Before taking a life insurance policy, there are a number of things you should know. It is essential to compare a number of life insurance policies and companies before making any decisions. A life insurance can be a source of financial stability for your family once you die. A lot of expenses are involved in regards to funerals. Furthermore, should there be any debts left unresolved life insurance provides a necessary means to pay them. Insurance companies may have varying policies and insurance plans. This is why it is crucial that you thoroughly understand each one before determining the best for yourself.

Facts that you should note about life insurance include;

• Why you need it. A life insurance policy guarantees that after you die within the stated period of the policy, your family, or beneficiary, receive a predetermined amount of money, tax free. During the life of the policy, you will pay premiums every month to cover it. The premiums are dependent on your health, age, income and lifestyle, among other factors. Even though it is not required to take up life insurance, it is a good safety nest to have for your family.

• How much coverage do you need? Insurance companies will help you determine how much coverage you can get. However, online calculators can aid you to do the calculations yourself, as long as you know what to calculate. Usually, companies will establish your current debts, income, mortgage expenses, daily household expenses and any other expenses. You also want to look into the future and account for it. If, for instance, the mortgage will not be paid in full, account for this in your coverage. It is important not to take more coverage than necessary but ensure every angle is covered.

• What life insurance should you take? There are generally two types of life insurance; term and permanent. The former is the more preferred life insurance policy, and it is more affordable. It is a short term insurance policy, or rather it lasts for a specific period of time. Term life insurance is renewable and can be switched. Because it provides coverage until the age of at least 80, renewing it may become a bit pricey. Thus, many people on this policy opt to change it to a permanent life insurance. Permanent life insurance affords you lifetime coverage. There is the option of whole life, universal life or term to 100 under permanent life insurance.

• When to purchase life insurance. You do not have to wait until a certain age to be eligible for life insurance. Many people wait until they are married with children. However, you can purchase life insurance at a young age. The policy costs less when you are younger compared to when you are older. The older you get, the higher the rates, mainly because our bodies deteriorate with age. Premiums are determined by your health status, medical history, among other factors.

• What policy should you take? There are two policies available; guaranteed and reviewable. A guaranteed policy means that your monthly premiums will remain the same throughout. The insurance company will not raise your premiums at all. A reviewable policy means that the insurance company will appraise the premiums after a given period of time. This means that they may increase the premiums with every review done. Initially reviewable policies have lower premium payments but as time elapses, they increase.

If you are going to take a life insurance policy, get all your facts straight to avoid over insuring or under insuring yourself. It’s worthwhile having all the relevant information before meeting up with insurance companies. You will be in a position to ask questions and get clarification on anything you do not understand. In addition, you will be able to know what suits you best with the right information at hand.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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