Life insurance is bough for a number of reasons. The reasons may include arrangement of cash for funeral, for ensuring dependants’ financial security after the earning member’s death, and for having adequate coverage to pay off outstanding loans or mortgage.
Being the breadwinner of your family, you must have sufficient life insurance coverage to protect your family’s financial health in your absence. And when it comes to buying life insurance, you must ask your insurance agent some important questions. The questions are,
What is the difference between whole life and term life insurance?
There are mainly two types of life insurance policies available in the market – whole life insurance and term life insurance. Whole life policies pay a certain amount of money to the beneficiaries after the policyholder passes away. It can be also bought from investment perspective. The policyholder can alter his policy into cash prior before his death. Term life plans remain in-effect for a particular period of time. The latter are less expensive than the former ones as they offer the benefits of investment.
When does your chosen policy expire?
Term life policies start and end on a particular date. After the end of that term, the coverage expires and the beneficiaries won’t get any benefit in case the insured dies. The insured person must know his policy’s expiry date so that he doesn’t skip policy renewal. Some term policies offer grace period to let the policyholder make payment within particular number of day following the policy’s expiration date. In case the life insurance policy expires, the policyholder may need to negotiate the policy with the policy provider at a comparatively higher rate of premium.
How much coverage do you need?
As one of the smart and informed life insurance leads, you should determine how much coverage you need. You should consider the financial obligations you would leave behind for the dependants such as outstanding debt payment, mortgage payment, funeral expenses etc. You should also consider the coverage you presently have; for example, what you get through your employer. Many life insurance agents use a specific calculation to help the shoppers determine the lever of insurance coverage required.
Discussed above are just 3 of many questions you should ask your insurance agent while buying a life insurance policy. You must compare policies offered by different insurers to get the best possible deal at the most competitive rate.