As per a survey conducted by InsuranceQuotes.com, approximately 4 in 10  Americans don’t have life insurance coverage. Among the ones who have it, more than one-third don’t know the exact insurance coverage that they have. Post the great recession, Americans were struggling to make the ends meet. Buying insurance coverage was the last thing on their mind for obvious reasons.
Now that some time has passed and on an average, Americans are recovering financially. It is time to think about financial planning and give due importance to life insurance.
The Importance of Life Insurance
In spite of leading a healthy lifestyle and the increased life expectancy (due to the development of science and technology), one can never predict how long he/she is going to live. Amidst such clouds of uncertainty, life insurance is the silver lining.
We all want our families to be happy. Right?
Well, the security of your family’s financial future is just quick a decision away. Buying an adequate life insurance is a surefire way of making sure that your family’s financial needs are taken care of, even if you’re not around.
Thanks to the variety of life insurance plans available in the insurance market, buying life insurance can be confusing. If you find it difficult to figure out what type of life insurance would fit you best, what features to look for, etc., relax. We are here to help you. In this article, we will help you decide how you can select the perfect life insurance plan.
The Financial Future of Your Family
If you are single and not making that money it’s okay. You just have to pay your bills. However, if you want to settle down soon, there will be people who will financially dependent on you. Even if you don’t want to settle down, you will have to take care of your aging parents. In such circumstances, if anything were to happen to you, your loved ones would be extremely insecure and vulnerable. Thus, to safeguard your finances, here is a guide that will help you select the perfect life insurance plan.
1. Why You Need Life Insurance
Generally, people buy life insurance because people around them are buying it. Buying life insurance without a financial objective is like shopping for an outfit without knowing the occasion. Just like various occasions have various dress codes, the same goes for life insurance. It is formulated to provide financial security in case of the insured’s demise. Analyze your life insurance needs and then opt for a plan that offers the desired benefit.
2. The Perks of Being an Early Bird
Buying insurance early has its own benefits. When you are young, you are less exposed to the risk of contracting illnesses. It means you are less of a liability for the insurance provider. As a result, your insurance premium is less expensive. As you age, your insurance premium becomes more expensive.
3. The Coverage Amount
The money your family members/ legal heirs receive after your demise is known as a death benefit. In order to evaluate the amount of required life insurance, life insurance premium calculators can be used to compute the exact coverage you need. If you don’t go for an adequate coverage amount, then the financial future of your family could be in jeopardy. Eventually, the whole point of buying life insurance will be nullified.
4. The Right Kind of Plan
Once you know the amount of coverage you need, the next step is to find the right plan that offers the desired insurance coverage.
5. The Comparison Is the key
Don’t buy the first plan that you come across. Before finalizing the plan, shop around, compare various plans based on the insurance premium and policy benefits and then select the plan that suits you the best. The comparison is the tool that makes sure you get the best coverage at the best insurance premium.
6. Living Benefits
Ideally, you should go for plans that come with living benefits. While you’re alive, it enables you to access the death benefit under specific circumstances. Living benefits come in the form of add-on riders such as:
a. Accelerated Death Benefit Rider- It enables an insured to access his/her pay-out in case he/she is diagnosed with a terminal illness. The terms and conditions vary insurance provider per insurance provider. The rider can be opted by paying a nominal insurance premium.
b. Chronic Illness Rider- It enables an insured to access his/her payout in case he/she, is unable to do 2 or more activities related to daily living such as bathing, dressing, and eating etc.
7. Financial Health of the Insurance Provider
A plan is good only if the insurance provider is able to offer the promised insurance benefits. You can check if a plan looks good only on paper by checking out the financial health of the insurance provider. If the company has a good history of claim settlement, you can go for it.
8. Read Policy Wording
Before you buy a plan, thoroughly read the policy wordings of policy document. It will give you a clear idea of the plan features, benefits, premiums and exclusions. Eventually, you won’t end up making any assumptions.
9. Insurance Terminologies
Before you check out the various insurance plans, you must brush up your insurance vocabulary. It will ensure that there is no room for confusion and you know what you are getting into.
In a Nutshell
In this world, we are obsessed with the word ‘best’. We want nothing, but the best. The term ‘best’ changes is relative. For instance, the best insurance plan isn’t one that comes at the lowest insurance premium. The best insurance plan is one that fulfills your insurance expectations. A plan that is best for ABC might not be the best plan for XYZ. That being said, it doesn’t mean that there is something wrong with the plan. It’s just that their insurance expectations are different.
Insurance expectations are affected by so many components such as age, income, marital status, size of the family and mostly, the profession of the spouse, in case insurance buyer is married. If the spouse is a homemaker, then insurance expectations would be greater for obvious reasons. So take the plunge and secure your loved ones’ lives.