Important Considerations Before Buying Life Insurance
[social_share]Life insurance is an important part of providing for one’s family or loved ones in the weeks and months following one’s death. It is so important, indeed, that it should not be done without proper forethought. Below is a list of considerations people should make before buying life insurance.
Policyholders should consider the purpose behind taking out a life insurance policy
The average person believes that life insurance strictly provides a death benefit for the policyholder’s loved ones in the event of their death. The truth about life insurance, however, is that using it as a financial safety net is only one aspect of its overall applicability. Indeed, a life insurance policy can be taken out with the aim of covering any outstanding debts that the policyholder has incurred or will expect to incur throughout the course of their life. In this way, their policy will be helping family members and loved ones to cover the many bills that they leave behind. Life insurance may also be used as a means of providing for the education of the policyholder’s dependants, or the principal beneficiary may be a charity or religious organisation to whom the policyholder would like to donate money. The purposes of a life insurance policy can be as varied as the number of policyholder’s, but the purpose will determine how much coverage the customer will need to pay for as well as their monthly or yearly premiums.
Policyholders should consider if a group life insurance policy is best
Group life insurance is often obtainable for employees who have bought in to their company’s life insurance plan. This type of life insurance tends to be lower in cost and comes with a host of other benefits as well. Because group life insurance can be acquired through one’s employer, sign-up and policy management is a breeze. Little personal supervision of the policy means less stress and less time invested by each individual employee. Group life insurance covers tend to forgo the physical exam requirement that is attached with the majority of individual life insurance plans, meaning policyholders do not have to arrange for a doctor visit and will not have their health play a part in determining cost. Premiums are deducted automatically from the employees’ pay cheques each month, excusing the employees themselves of having to mail in payments or set up the direct debits on their own. Whilst group plans can be very convenient, they are contingent upon the individual’s employment with the company, meaning their coverage can be terminated should they leave or be fired. Also, the amount of coverage on a group plan tends to be lower and can leave individual employees under-insured.
Policyholders should consider if an individual life insurance policy is best
Individual life insurance policies are the most common policies, and for good reason. Not only can they be taken with an employee when they leave a company, but they will provide a lot more coverage on average than a group life insurance plan. The premiums on an individual policy also tend to be more level than on a group plan, which can fluctuate more wildly in part because they are not set according to a previously agreed-upon term. Individual policies can also be amended much more easily than group policies. Group policies tend to tell policyholders what kind of coverage they will receive and for how much, whereas individual insurance plans can be upgraded to the policyholder’s liking at any time of their choosing. Individual policies are more expensive than group plans, however, and will require a physical exam and consideration of the policyholder’s medical history.
