Are you planning on buying a life insurance? Everyday we are bombarded with dozens of advertisements that promote life insurances. But the thought of preparing something in the event of our death is something we usually avoid. Death is quite hard to contemplate on, even more if the one dying is you. On the other hand, it is inevitable, especially when you have a family or relative relying on your income. You would have to think about what if something happens to you, who would pay the mortgage on the house? Who would pay for your child’s tuition fees? You would leave behind more problems for your loved ones. This situation can be avoided when you are insured for life. But you don’t just go buy any life insurance out there. It can be problematic since this may be a new thing for you. There are things that you should first consider or do when buying a life insurance.
If you’re a first timer, you might encounter new terms. You’ll end up confused. You’ll have a harder time in choosing your life insurance policy.
Let me explain to you some of the common terms used in purchasing life insurances.
Premium – In the world of insurance, this is regular payments you make to maintain your insurance policy.
Cash value – This is the money that will build up and increase in your insurance policy, assuming that you purchased a whole life insurance.
Mutual insurance company – This pertains to a company that is owned by policyholders. It has no stockholders and capital stock.
Dividends – This is a part of the insurance companies’ profit that is allocated to policyholders under a mutual insurance company.
Now that you know what these terms mean, it’s time to find out how much coverage you need. In other words, you determine the death benefit. This would be the money that your remaining spouse and children would need for their expenses. You should calculate how much he or she would need until retirement. For your children, how much it would cost to pay off their tuitions until they finish college? People usually have problems since they may have too much or too less coverage. There are a number of websites that can help you with this computation. These sites provide an online calculator to determine the proper amount of coverage. Although these are rough estimates, they can still help you figure out how much you really need. However, you can also compute it manually by multiplying your annual salary by 8 but this may not be accurate enough.
In determining a company to buy from, you should first consult the companies’ ratings. You can find these ratings online. Chances are these companies can provide you a better quote and policy. In buying the insurance, you can actually buy it straight from the company. You can also hire a financial planner or an insurance agent for consultation. An insurance policy involves a lot of cash and a long term investment. You may need professional help before purchasing one.
You are also required to compare life insurance rates online or offline whatever suits you the best. This is an important step before buying yourself an Insurance policy, as you don’t want to pay more of your money for no reason.
You might as well decide to be healthier when buying insurance. When the company knows that you are healthy, they will provide you a better quote for your policy. This will save you money. So you may consider quitting smoking, decrease drinking, and start exercising.
As you can see, buying insurance can be a daunting task. You have to go through a lot of things. But knowing that your family’s future is secured through life insurance, you will have peace of mind. You know you’ll still be there for them regardless of whatever happens.