subject: 4 Things You Need To Know About Life Insurance [print this page] Choosing a life insurance must be planned out carefully by considering some essential information such as: need, coverage, type, and cost.
If you want to secure the future of your family, make sure you get a life insurance for protection. Not all appreciate the importance of getting a policy, aside from the fact that it is costly, it is often deemed intangible not until death occurs. Thus, many insurance companies are trying to disseminate information so that people may have at least basic information about how it works. There are some things you need to know about insurance policy, which are as follows:
Need
Not all people need life insurance; therefore, you need to carefully think before buying one. If you are single or do not have any dependent, you may not need to purchase a policy since nobody will serve as your beneficiary. However, if you have financial obligations to your family, securing your family's future would be the best thing to do. In the event that unexpected death comes, being insured is a sort of protection.
Coverage
There is no fix amount as to the coverage of life insurance; however, it is advisable to purchase as much as ten times your annual salary so that safety net will surely be attainable. To determine the amount of coverage, you need to consider your income in relation to your financial obligations. Aside from the salary, take into account the number of dependents who will be sharing the entire amount. This is to ensure that everyone will have enough funds to finance their day to day existence in case the breadwinner is no longer present.
Type
There are several types of insurance policies available in the market today. Most of them have riders; policies that help maximize its coverage. The premiums vary according to the type as well as the participating policies that come along with it. Therefore, choose your coverage meticulously so that you will not regret in the end. To help you decide, here are the types of policies with their corresponding descriptions:
Whole life
This is a permanent protection that usually covers up to 100 years. It has fixed premiums, which builds up cash as well as dividends.
Variable life
Variable life is a form of whole life insurance with varying death benefit and cash value. A portion of it can be allocated to a different investment funds; however, the value is dependent on how well it is doing in the market.
Universal life
Also known as Flexible Premium Adjustable Life Insurance, which is another version of whole life insurance, but based on cash value. It is a permanent yet flexible policy because it offers 2 death benefit options to allow the policy holder to catch up with premiums in case instability of income arises.
Cost
The cost may vary depending on some factors concerning health and occupation. Smokers are charged more because of the effect cigarette smoking can bring to the body. Same applies to obese clients because health issues such as diabetes, hypertension, and the like are expected to develop in the future, which may render them high risk. Those jobs that require frequent traveling such as those of pilots and seamen have higher premiums because of the hazardous nature of their work.
It is always important to have a knowledge about how insurance works, so that you will get the maximum protection for your family. If possible, transact only with reliable agents so that you will not end up paying high insurance policies brought about by very high commission rates. You will appreciate the benefits of every policy usually as you get older where you start to feel vulnerable.
by: Jacob Schiffer
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