Life Insurance: How to Choose the Right Type for You

Purchasing a life insurance policy may seem like a daunting task at first. After all, there are so many different types of policies, and not all of them will be right for every person in different stages of life.

How to Choose the Right Life Insurance

If you require life insurance but aren’t sure where to look, this is for you. Keep reading to learn more about what life insurance is and how to select the right type.

What Is Life Insurance?

In simple terms, life insurance is a financial product intended to provide lump sum cash payment when the insured passes away. Life insurance aims to help tide over financial challenges that may arise after the death of a loved one, and also serves to cover any outstanding debts or fees that may have been owed at the time of passing.

A life insurance policy aims to protect against the risk of demise caused by an accident, old age, health disease or disorder, or a life-threatening condition. A life insurance policy is designed to protect the life of the insured for a defined or pre-determined period, provided the premiums are paid on time. However, in the event of the death of the insured, a cash settlement is paid to the nominated beneficiary, subject to the terms and conditions of the life insurance policy. 

But Who Needs Life Insurance?

You could need life insurance if you have others who depend on your income. Life insurance may come in handy if you have debt that will continue to prolong post-death. A healthy person who does not smoke or consume tobacco in any form could expect to pay less for a life insurance policy in comparison to someone of the same age who does. Another critical parameter to note is that life insurance can become expensive, and it may be a challenge to get the policy approved by the underwriter. In the insurance domain, an underwriter is a professional who analyzes and assesses the challenges in providing insurance policies to individuals and companies. In most cases, the insurance policy pricing is established by the underwriter.

Why Is Younger Better in Taking a Life Insurance Policy?

Experts echo that the younger you are, the better it is to take a life insurance policy. One of the reasons is that younger persons can qualify for lower premiums. The general understanding is that the older you are, the more likely it is that you could develop health complications that can make insurance expensive. Health problems could also disqualify individuals from signing up for a life insurance policy. 

Should I Purchase a Life Insurance Policy Now?

There’s never a wrong time to purchase a life insurance policy. However, don’t be in such a hurry to buy a policy that you skip the step for weighing the pros and cons. It’s important to be aware of exactly what you’re purchasing and how it may or may not adapt to the changing circumstances and milestones of your life. Don’t wait too long, though: if you’re young and in good health, it is recommended you sign up for life insurance as soon as possible as you could end up paying a lower premium. Globally, premium costs for those who are between 30 and 40 years old can be 1.5 times to 1.9 times higher. Additionally, elerdly people who purchase life insurance policies may have to undergo extensive medical screening, and if all parameters are not satisfied, the life insurance coverage could be denied. 

How Much Life Insurance Coverage Should I Purchase?

There’s no perfect answer to this question, as different people have different needs and different requirements! However, a good rule of thumb is to multiply your annual expenses by 15 or 20. This number will give you an approximate estimate of how much money your family or dependents could need in your absence. And of course, the life insurance needs of someone in their 40s will be vastly different to those of a person in their 80s. Your life insurance coverage should be a reflection of your income, expenses, savings, and life stage. 

How Do I Find a Good Insurance Company?

Before committing to a life insurance provider, you can check if the company provides options to meet your needs. While pricing is important, it should not be the only criteria for signing up with the service provider. You could check if the provider has positive reviews and if they’re trustworthy. If you know someone who has purchased a policy through the provider, consider asking them what their experience was like and if they recommend the broker. You may also want to determine if it is a viable financial institution. Additionally, you can take a closer look at the company’s solvency ratio. It is a reflection of the financial position of an insurer and its ability to pay and settle claims. It is calculated by dividing the company’s operating income post-tax by its debt liabilities.

Before you sign up for services with a life insurance service provider, you may also want to determine the customer service reviews. One of the ways to determine this is by gathering information from multiple online and offline sources. In the process of researching and reading about the insurance provider, you will understand how the group manages claims, the period taken to settle the claims, and how the paperwork is handled. After all, if your policy ever needs to be paid out you’ll want to ensure that your loved ones have a painless process and not be swamped with paperwork in the midst of their grief. All of these things are great to look into when deciding on your life insurance provider!

If you are unable to decide about your life insurance policy, get in touch with our team at DeverCare Insurance Group. Our experts will help you choose the best plan for yourself. Contact us for more information on how we can help you.

Categories