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Things to Consider in Getting a Life Insurance

Life insurance is designed to provide financial aid for your family in the event of your death. With the purpose of replacing your income if the unfortunate comes, it could be one of the most important financial purchases you will ever make in your life. Life insurance is not free, so you have to make the most out of your purchase and ensure that your family will get the adequate protection that you intend them to have.

Determine the Amount of Coverage

The first question you need to answer is how much amount of insurance do you need? Assessing your current and future needs, as well as your income will be able to help you know the answer. If you are paying for the mortgage, your children’s tuition fees, and other obligations, you need to calculate just how much security your family will need to support these payments if you were gone. You will also need to consider your medical or funeral costs.

Term Life or Permanent Life Insurance

Though there are many different kinds of life insurances, it all comes down to two main categories, namely the Term Life and Permanent Life. Term life pays out death benefits to your dependents only if you die within a specific time period, while permanent life provides financial support for your dependents if you die, whenever that may be. Although the latter is a nice option, it’s actually more expensive. Both of these policies have their own pros and cons so it’s just a matter of weighing out your needs for your particular situation.

Choosing Your Beneficiaries

One of the vital aspects of arranging a life insurance policy is choosing your beneficiaries. You have to ensure that they are correctly named. You may assign one or more, and also a contingent beneficiary who will be entitled to receive the benefits in case your primary beneficiaries are unable to receive them.

Choosing the Distribution Option

There are a number of ways in which your beneficiaries may receive your death benefits. First is in the form of a lump sum, cash payment. Second is through installment option. This can be paid in the form of a regular income for life with fixed amounts paid in regular schedule. It can also be paid through decreasing or increasing term whereas the amount of payouts decreases or increases throughout the term at a scheduled rate. These installment options can prevent your dependents spending all of the money at once.

Inquiring About the Contract Limitations

In all insurances, there are certain conditions that could prevent the insurance company in making the payouts to the beneficiaries. These restrictions include suicide, acts of war, illegal activities, and substance or alcohol abuse. If you engage in dangerous activities or have an existing medical condition, you are seen as a high-risk customer. However, these conditions could vary from provider to provider, so you have to ask about them so you will know what’s covered and what’s not.

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