Many people are apprehensive about buying life insurance. It’s surprising how people put in so much thought to every aspect of their lives, except on what will happen to their loved ones after they’re gone.
The reason you need to find the right coverage is that after you are gone, your family members will have a financial safety net to fall back on. In our previous blog titled “Different Types of Life Insurance Policies,” we talked about what coverage is provided under term, whole, and universal life insurance. After you have chosen a policy that suits your needs, you can consult with an insurance agent to design a coverage plan based on your financial situation.
But wait! Before you sign that contract, why not go over it one more time just to make sure that everything mentioned in it is what you asked for? Your claim can be denied in the future if what you said was not clearly identified in the contract. Following are a few dos and don’ts of life insurance that will help you design a foolproof life insurance policy:
Dos of Life Insurance
Be Crystal Clear in the Contract About Why You Are Buying Life Insurance
Why not answer this question by yourself? Now that you know what each life insurance policy covers, you can have a look at your lifestyle and come up with the right coverage that protects you in different difficult situations.
For example, Madeline is a single mom and is planning to buy an insurance policy to protect her little girl. Most likely, she will need coverage for 20 years that will have higher death benefits. On the other hand, Dan bought a new car on loan and is now worried about who will pay it off in case he passes away. In this scenario, Dan will need a policy for 10 years that has lower death benefits.
Calculate the Coverage Amount You Need
“I want $300,000 in coverage.”
How did you come up with this amount?
This is the most common question that insurance agents ask when you give them the numbers for your coverage. Your answer probably goes something like this, “It sounds reasonable.” Your calculations might seem correct, but that doesn’t mean that it will be enough for your family. You need to sit down with your insurance agent and calculate the numbers based on your family’s lifestyle.
Set a Budget That Is Realistic
Life insurance policy is based on a person’s health. If you are in good shape, you will be able to secure more. Don’t believe those advertisements you see on TV because they might say you can get an insurance policy at any stage of life but they don’t mention the “conditions applied”. Be honest about your lifestyle and health, so that agent can design a better insurance policy for you.
Buy the Policy from an Experienced Insurance Agent
An insurance agent’s job is to assess your needs and wants and then craft a policy that matches them. If the agent is not experienced, he won’t be able to assist you with anything. This is where the agent should review your financial situation and come up with a plan that helps you keep up with the premium payments.
Read Reviews About the Insurance Company You Have Chosen
The customer service might be great from where you are buying your life insurance policy, but that doesn’t mean they are that good from start till end. Check out any reviews about the company and do read the complaints. If you feel that the good outweighs the bad, then checkout the company’s rating.
Don’ts of Life Insurance
Get Stuck On the Price
When you are buying a life insurance policy, don’t focus on the premiums. The reason why every company offers a different price is because the benefits offered under the policy are different. You can easily get the policy customized, such that it covers the comforts of your family’s lifestyle. Look out for the product that offers more value with an affordable price tag.
Buy a Standard Policy
A standard policy covers the basics, which might not allow your family to make a claim in unforeseen circumstances. For example, Samantha’s job involves travelling to different countries to meet clients. Sometimes, these countries are at the cusp of war or susceptible to frequent storms. If Samantha buys a standard insurance policy, the insurance company may not pay a dime to her family members in case something bad happens to her.
Sign the Papers Unless You Have Reviewed the Policy Twice
Do you trust your insurance agent? Even if you do, don’t just sign on the contract because you believe in him or her. Go over the insurance policy before signing. Tell the agent about any incorrect information you find and ask him or her to make the changes then and there in front of you.
Think That Once You Buy Life Insurance, Your Job Is Done
Your life is subject to changes, which means you will have different needs and wants in the future. For example, Adeline got a promotion at work and a huge raise. The first thing she did was moving to a better place and admitting her kids in a private school. Since her and her kids’ comfort needs have changed, she need to review her life insurance policy to make sure that if she passes away, her kids will be able to live with the same comforts. Typically, the policy should be reviewed after every 2 years.
Wait Until the Last Minute to Buy Life Insurance
While death is an unpleasant topic to talk about, imagine the problems your family will go through if you died in an accident. You can even purchase a life insurance policy at a young age. This way, you will be able to get a good deal with a reasonable premium.
Keep in mind these dos and don’ts of life insurance when purchasing a policy. Remember, do your research before approaching agency and make sure they have “A” or “B” category rating. If you are looking for a qualified insurance agent who holds years of experience in this field, visit Pawson. We provide different types of life insurance policies for families and individuals. To know more about our policies, contact us at 203-481-8898.
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