Tips to Purchase A Life Insurance Policy
It is important to secure your life, especially once you reach a particular age. You must understand the fact that you may have to look after your family in the near future. It is thus, crucial to choose a beneficial policy.
There are several life insurance policies available in the market but choosing the one that is the most beneficial to you can be a little tricky. Plus, you have to take into account the amount it will take in order to create a balance between investment and expense.
Discussed below is a simple guide to purchase a life insurance policy that works for you:
#1-Consult your family doctor before applying for policy
Irrespective of you opting for a short term or long-term insurance policy there are basic standard norms to be followed. One norm which any applicant ought to follow is to carry out a medical test.
The main reason why doctors suggest a medical check-up before applying for an insurance policy is to resolve pending issues on health records and stay updated on it.
Some life insurance companies review your past medical records. This will reflect any lifestyle or health changes that you have made in the recent times. For instance, you have been a smoker and overweight with minor health issues, but you changed your lifestyle and currently are in a better form.
Your health is directly proportionate to your rating, this means healthier you are better would be your rating. As far as insurers are to be believed the cost changes by 25% as per your health.
This means that if you are in pink of a health you get to make 25% of additional savings on your policy.
#2- Ask for valid assurance
Always ask your agent to send you screenshot of important quotes. There are some companies which recommend few policies just because they get better business from them and that particular policy company.
However, this may not necessarily be the case for every policy there are some genuinely beneficial policies with a strong valid reason. At times, the insurer may not quote you best companies just because you have specific health issues or certain kind of lifestyle. Perhaps, this may restrict you from investing in the best or lowest quote.
This can be quite possible because most people are unaware about policies and the terms and conditions mentioned in them. Therefore, it is wise to always ask for screenshot of different quotes on the agent’s screen.
In case you note that your agent is not offering you the best quote then you can always enquire the reason for the same. It is beneficial to look for a company which understands your needs and considers your budget. This way, you will not skip any of your payments which are to be paid to the company and can also strike a balance of cash flow all through the month.
Nowadays, you can also check company profiles online and get a better understanding of their services through their website.
#3-Build policy layers
You can invest in one policy which charges an expensive amount or invest in multiple policies and tone down your price.
Well, every individual has a different lifestyle and therefore their needs too vary. This means that some individuals might opt for a particular policy at 30 while others may opt at 40.
Therefore, look into multiple factors of a policy just to ensure that you are actually paying for your needs and avoid unnecessary payments. ‘Layering policy’ is a term often used when a person invests in multiple policies for different purposes and time.
If you note that you do not need a policy with respect to a particular purpose cancel the policy. This technique helps you to save money and is more fruitful.
For instance, instead of buying an expensive policy you can invest in 3 different polices which covers income replacement (for 25 years), kid’s education (for 15 years) and your mortgage (for 20 years).
#4- Choose annuity over lump sum
Due to lack of relevant knowledge about insurance policies, people often opt for lump sum instead of an annuity pay-out.
The main difference between the two is that in lump sum option the family receives a lump sum tax free amount after the death of the individual. On the other hand, annuity pay-out is wherein the family receives benefit or the money over a period of years.
Apart from this, ensure that you do not sign-up for any other policies except from the one you are opting for. This is to avoid a similar struggle which PPI victims are suffering from. There are people making successful PPI reclaim even today and earning back compensation in guidance of trust-worthy companies.
Therefore, always be careful while making any financial investment.
#5- Do not share unnecessary information
It is not necessary to discuss personal information if not asked for or is not important. There are companies which believe in the blame game wherein they cite that if the father of the policy owner dies of cancer the owner as well, will go through it.
However, this is not necessary and thus, you must not share unnecessary information with agents.
It is wise to invest in a life insurance policy right from a young age so that you can secure yours and your family’s health. Besides, it becomes easier to manage this expense if you have invested while you are young.