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Tuesday, November 26, 2013

Life insurance: Things to look out for when choosing a policy

Without life insurance, families have an increased financial risk
Life insurance benefits differ between policies
The reality of things means that at some stage we’re all going to pass on and though it’s not easy to discuss it with loved ones, it’s a fact. However, whether you find it easy or not, proper financial planning is a good idea and responsible.

Life insurance can be the perfect solution and provides peace of mind. However, the biggest issue is choosing the best possible plan and fortunately there are a number of options out there. There’s no one fit all solution as most of us lead different lives. Fortunately, there’s also many flexible plans too, allowing you to change the plan as your life does.

However, let’s take a look at how you can ensure you have the correct plan for your needs and have no worries about cover.

Coverage


The main thing when choosing a policy is to decide between whether you want life insurance that pays upon death, or term insurance that will last for a definite period of time and pay out only until a certain age – say retirement for instance. Term insurance is lower in price as there is a likelihood you won’t pass-on within the specified term. However, though life insurance is more expensive, it will ensure that you are covered for the remainder of your life and there will be a payment, albeit a deferred one. The best policy to choose is one with the option to chop and change and add to and take away. This gives you full flexibility and allows you to change to suit your needs or changes of mind.

How much to insure


It’s hard to decide on how much to insure, however income multiples are often a good place to begin. Many insurance companies offer 20 times your current salary as a cover level for life insurance – take a look at My cheap life insurance to get an idea. Of course, you should also take into account tax in case of such an occurrence.

The options


As we’ve mentioned before, each and every person will require something different from their life insurance policy and it’s up to you to choose this. These can be decided on the life you lead, what you want and what you intend to do. Many insurance policies nowadays allow you a greater degree of flexibility than ever before and this means you can take advantage of all sorts of policy options when the time comes to do so, or to make a change.

The policy


A lot of people have life insurance policies with their work and this means they end up with a heavily discounted policy that covers them for the time they are in that specific workplace. This ensures that the person is covered should anything happen during their time in that career. However, most of these policies end when you leave that place of work or retire.

People often find continuing such a policy tends to be very costly, mainly because the business subsidised it. However, looking around beforehand for a fully private policy can be a far cheaper and more beneficial option. If you’re healthy when you look and do so well before retirement, you will find that you can get a far better deal that if you wait until nearly retired or in bad health.

Signing up well in advance and paying a little extra before you retire or move jobs can mean saving a lot of cash in the long term and means you pay a lot less for the policy.

So, by following these tips you can greatly lower your policy and get the right insurance to ensure you’re safe, covered and assured.

Image license: Kelly Sturgeon, CC BY-SA 3.0