If you are looking to buy your first life insurance, then you will certainly have a lot to think about. Questions like “How to find the right agent”, “Can I trust the agent”, “Is the policy right for me”, “How much cover should I get”, and “Is the policy worth the money” are bound to crop up in your mind.
Here are four important tips that can help you choose a policy that’s just right for your needs:
Compare, choose, and verify the company’s background
The first thing you will have to do is find a reliable insurance company. Plain as day, the best insurance companies offer the best policies, so it makes sense to start with an online research. Make sure to compare and shortlist a few good companies and do a background check on each of them. After all, the credibility and reputation of the company is going to play a major role in your insurance hunt because any policy that is worth paying for is only as good as the company that is offering it.
Ask for personal the company’s license copy, their existing client base, the number of claims they receive, claims that they have accepted, and recommendations from previous clients. If the company is listed in the stock exchange, make sure that you check its stock price performance and quarterly earnings report over the past few quarters. Evaluating these factors will put you in a good position to know whether the company is worth doing business with or not.
Find out which policy is right for you
If you didn’t know, there are actually two different types of life insurance. They are term life and whole life policies. As the name suggests, the former is valid only for a certain period of time whereas the latter is valid till your death. Determine your needs and ask yourself which policy is more suited for you.
Of course, both these policies have their own advantages and disadvantages. For example, term life insurance policies are cheaper and focussed towards the short term. Contrastingly, whole life policies provide you with coverage for the rest of your life. Even in case of an untimely death, one of your family members (the nominee) will receive the amount on your behalf. A lot of families have been benefitted by whole life policy in case of unnatural deaths.
On the other hand, if you are a high-earning individual and are certain of making money consistently, then term insurance could be your best bet because it’s less expensive.
What coverage do you need
Once you’ve determined which type of insurance is best for your needs, the next thing to do is choose the coverage limit of the policy. This is not easy because it largely varies depending on the plan that you choose. In most cases, the death compensation is around 6-8 times the salary of the insured. However, each one’s salary and needs may vary, so it’s important that you look for more information on online forums and discussions or consult a friend who has availed a similar policy. Finally, talk to a professional agent and get to know the exact details on the policy.
Check the terms and conditions of the policy
Not all insurance agents will tell you about the pink elephant in the room. It’s your responsibility to ensure that all terms and conditions are read through (either by you or your lawyer) before going ahead with the deal. At the end of the day, no one wants to fall prey to hidden charges or shocking exclusions in the future.
Conclusion
There you go! These are simple but effective tips for first-time life insurance buyers to get peace of mind. If you have questions or suggestions, please feel free to write them in the comments below and we’ll answer them. Cheers!
