Before you take out a permanent life or term life insurance policy, it is always good to learn a few things about these insurance covers. More often than not, people are so excited that they never take the time to understand the insurance terms or to go through the policy. In the long run, they end up getting a deal that is irrelevant. If you want to get an insurance cover to benefit your loved ones in the event of death, there are a couple of points you should understand.
Do You Need The Insurance?
This is definitely the first question you need to answer when considering an insurance cover. If you have a family, getting the cover is the best thing you can do for them. However, to know which type of insurance you need to take, you must start by evaluating your situation. The cover you get will depend on your personal situation; that is the people who depend on you. If you don’t have any dependent, it is obvious that you don’t need the cover. The case is the same if you don’t generate a good percentage of the family’s income. The whole purpose of getting this insurance is to support your family once you pass on.
How Much Insurance Do You Really Need?
There are many factors that determine the amount of insurance that you need. They include the number of your dependents, your lifestyle, your sources of income, your debt and so much more. There are some guidelines you can, however, use to determine how much insurance you need. Start by thinking of a policy that will be worth 5 to 10 times your annual salary if you die. Alternatively, you can speak with professional financial planners to calculate the coverage you should obtain.
Which Type Of Insurance Do You Need?
There are so many types of insurance that you can pick from. They include term life, whole life, universal life and variable life. With whole life insurance, you will get both cash value and death benefit. The best thing about this cover is that it helps build equity and the premiums remain the same regardless of your age. The downside, however, is the fact that this option has the most expensive premiums. The policy will also only take effect after you die.
How Much Does The Insurance Cost?
This is yet another very important question you need to ask the insurance company. The cheapest insurance is from the employer’s group life insurance. This is only available to persons whose employers offer it. These covers are basically term policies. With other covers, the cost will vary depending on the type of policy, practices of the underwriters, amount of commission paid to the agent, your preferences and so much more.
When selecting a cover, you have to do a thorough research to understand what you are getting yourself into. You don’t want surprises once you start paying premiums. There is no harm in using financial advisors prior to picking a policy.