November 16, 2018

 

Five Things Everyone should know about Life Insurance

Life insurance is one of life’s major decisions, often likened to a precious and lasting gift for one’s family. Despite the importance of this heartfelt gift, there are a few things about life insurance that few are aware of. Here is a list of the most important things that you should know about life insurance.

Everyone needs life insurance
Life insurance is not just for the chief breadwinner of the family. If someone depends on you financially or otherwise, then you need life insurance. A stay at home parent, or even a parent who does not contribute significantly to the household finances needs insurance too. They provide their families with ‘free’ services like cooking, cleaning, childcare and driving the kids around. In the their absence, the family would need extra income to pay for these services.

Young, single people are the most prone to thinking that they don’t need life insurance. But they do. Age is an important criterion in deciding life insurance premium amounts, and young people usually receive the best life insurance rates. When they do feel the need for life insurance later in life, they might not be eligible for cheap life insurance. Health conditions would have set in, preventing them from qualifying for the best life insurance rates. Single people think they don’t need life insurance but there is a chance that they won’t remain single forever. When they do have dependants, they may not be able to qualify for the same life insurance premium rates as now. Also, even if they don’t have anyone to leave money to, when they die there would be a few expenses – funeral expenses, unpaid mortgage amounts, loans are a few examples. In the absence of a life insurance policy, their aging parents or other siblings would have to attend to these payments.
Purchase a policy that will provide adequate coverage for your beneficiary
Most people don’t bother about working out the correct amount of coverage. Remember, with inflation your money may not really help your family meet all their financial obligations. On the other hand too much life insurance is also unnecessary, as you would end up paying extra premium amounts that you can invest or save.
So just how much coverage is enough? For the breadwinner of a family the rule of thumb recommended by experts is 10 – 15 times your current income. If you are a stay at home parent or care-giver, you can work out the values of each service you provide for the family, and factor inflation into the calculation so that your family is left with enough to pay for these services, in the event that you die. There are also several online calculators available on life insurance websites, and they can be quite accurate as they take inflation and your other investments into consideration.
Good health is a reason to rejoice, but bad health doesn’t mean you should stop looking at life insurance options.
When people have bad health, they assume that their premiums will be exorbitant, and they can invest the same money elsewhere. However, there are life insurance carriers out there who look more favorably on certain health conditions than others. How will you find them? The easiest avenue is to go online and get quotes on a reliable life insurance website. Smokers are usually bracketed high risk and are offered policies at high premiums. But many smokers do not know that if they remain smoke free for a period from 1 year to 5 years (depending on the insurance carrier’s rules), they can qualify for non-smokers policies.
However, this does not mean that your life insurance premiums will be as cheap as that offered for individuals who are in excellent health. Many contributors to major illnesses of today are controllable with the right diet and a healthy lifestyle. Improving your health is your ticket to affordable premiums.
Review your life insurance policy periodically
Life’s situations change often and this demands that your policy is reviewed often too. Marriage, a new baby, when seniors move in and become your dependants, a promotion or crisis in the work place, buying a house and medical problems are a few instances when life insurance policies need to be reviewed. Reviewing is important because it helps you buff up or trim down the amount of life insurance you need. e.g., when you have a young family, you have more liabilities and expenses. As you age, and your kids get jobs, you can trim down your coverage amount. Sometimes you may find out that there are other companies offering better rates. Reviewing your policy often will make sure that you have adequate levels of life insurance.
Shop around for life insurance policies for the most affordable policy that provides the maximum benefits.
Just like every other major buying decision, shopping around for life insurance is a great way to get the most affordable policy. Term life insurance policies especially can be bought online at very economical premiums. Online life insurance agencies can offer you the best rates because they deal with hundreds of life insurance companies. They can run your details through the requirements of these companies and offer you quotes in seconds. They are also a great way to compare the intricacies of various life insurance policies as they offer detailed comparison charts on each policy.

The importance of life insurance can never be emphasized too much. An uncertain economic situation and hard times are all the more reason to cover your family, and make them comfortable even when you are no longer around to look after them. If you don’t have life insurance yet, the best time to get it is now. As time goes by, it may be either too late to get life insurance or just too late to obtain it an affordable rate.