Getting life insurance is one of the most critical financial decisions of your life. So it is important that you be as well-informed as you possibly can be when making the decision. Here are some tips to help you out in getting the best life insurance.
This type of life insurance usually runs between 10 to 25 years. If you die during a term life insurance, your family is eligible to receive the insured amount. This type of insurance is great if you want to provide your family with a financial backup that can be used to deal with loan/mortgage obligations.
Term insurances can either be level or decreasing. The payout for level term insurance remains the same throughout the policy’s term. Whereas in decreasing term insurance, the payout decreases over time.
Life assurance is like its insurance counterpart apart from the fact that there is no term. This means that a payout is certain in the event of your death. Its functioning is a little complex too as a predefined payout doesn’t exist. For example, a portion of your premiums will go into investment funds. The payout which your family then receives is dependent on the performance of the said funds.
Over 50s Life Insurance
If you are trying to get life insurance relatively late in your life, then conventional plans could be quite costly for you. The Over 50s Life Insurance then steps in. Provided that your age falls in the range of 50-80 years, you are guaranteed to be included in the program. No medical examinations/records are required. However, the payouts are generally very low and more often than not these policies are used to cover for funeral expenses. As these policies don’t have high payouts so it doesn’t make sense in opting for them at a relatively young age. You might end up paying more in premiums than the payout.
Family Income Benefit
Most life insurance policies pay a predefined payout in a lump sum. This can be quite welcome in the wake of a financial crunch. But after the loans and mortgage are taken care of, it provides a considerable funds allocation challenge. Therefore some policyholders opt for the staggered approach. In a FIB policy, the payout is paid as non-taxed monthly salary. This sounds great but it has one major drawback. The number of months your family receives payment for is the number of months remaining in your policy after your death. So if you have two months remaining in your policy, your family would receive a payout for only these two months.
It is natural for couples to try and get joint life insurance policies. The main reason behind this is that these policies are slightly cheaper and entail less paperwork than two different policies. However, opting for a joint policy can backfire. First of all, with a join policy there is only a single payout. Despite thatthey are only fractionally cheaper than two separate polices.
So, if you want to opt for a joint policy. Make sure you and your spouse are insured for separate amounts (depending upon income) and varied time periods.
Honesty is Recommended
Many people try to deceive an insurance company by providing false information on their forms. They might say that they don’t smoke when they do. Similarly, they would say that they haven’t had any serious illness in the past when, in fact, they did. This would result in lower premiums. However, if your insurance company finds out the truth after your death then your payout is withheld.
Guaranteed vs. Reviewable Premiums
As the names state, guaranteed premiums don’t rise or fall over time while reviewable premiums do. It may seem that guaranteed premiums are expensive at the start. However, they provide you a certainty when budgeting as they won’t fluctuate. On the contrary, reviewable premiums are subject to review after certain time intervals. They would rise or fall depending upon your situation. But most often than not, they tend to increase.