Are you thinking of taking out a life insurance policy for yourself or for a loved one? If yes, it’s essential to be able to read the fine print and not feel totally confused. We’re about to share some of the things that you should absolutely know as you get your personal finances in order for the future, before taking out a policy. Let’s start with the basics.
What is a Life Insurance Policy?
Life insurance is a contract made between an individual and an insurance company. Within that contract, the individual agrees to pay a set sum of money at pre-determined intervals. This is called the premium. The other party, the insurer, agrees to pay a sum of money to the named beneficiaries in the contract should the insured person pass away.
There are Different Types of Coverage
Not all policies are the same so it’s important to do your research. Based on your circumstances and what you want your policy to cover, you can choose from the following plans:
Term
Whole
Simplified issue
Universal
Guaranteed issue life insurance
Final expense insurance
Variable universal
Group
Variable
You should take some time to review each option and the extras that can be added before taking out coverage. Choosing the right policy will ensure you have proper coverage should something go wrong.
Applicants Need to be Aged 18-65
To take out a policy in your own name, you need to be aged 18-65. Most companies follow this rule to limit their risk of having to pay out. That said, some companies will offer cover for people up to the age of 90. This usually involves taking a medical or showing the company a doctor’s report.
The Cost of Premiums Depend on Many Factors
Rather than plucking a number out of thin air, insurance companies take many factors into consideration when it comes to determining premiums. These include;
Age
Job
Type of cover required (retirement plans, child savings etc.)
Sum assured (the amount the insurer agrees to pay the beneficiaries should the insured die)
Policy term (how long the policy holder wishes to have the policy in place)
Riders (the extras that are offered to increase coverage i.e. accidental death)
You Can Sell Your Policy
A viatical settlement is an agreement where an individual with a terminal disease decides to sell his or her policy at a discount from its value in exchange for quick cash. The buyer then cashes in the full amount of the policy when the original owner of the policy dies. Not facing a health crisis but you still want to sell your policy? Individuals don’t have to be facing a health crisis to cash in with a viatical settlement you can review from this site here. It’s also an option for those that don’t want, or can no longer afford, their policy.
Key Life Events are Often the Best Times to Take Out a Policy.
Are you getting married? Have you just had a baby? Bought a house? Got a new job? These times in a person’s life are often the triggers of realization that insurance cover is required. Remember, you can modify your plan so be sure to review your policy when your circumstances change.
