Trusted Purchasing A Term Life Insurance Policy Advice, Tips, Guide

Purchasing A Term Life Insurance Policy

31 Jan 2020

Things To Look Into Before Purchasing A Term Life Insurance Policy

Uncertainty never knocks — so we’ve got to be on red alert with a full arsenal. A life insurance cover is such a gem tool against your family’s future financial uncertainties, and a term life insurance sounds even better. A term insurance policy promises to pay an agreed-upon lump-sum to the policy holder’s nominee(s) upon his/her demise when the policy is in force. A discerning individual will opt for a term life insurance policy (and not a whole life insurance) for myriads of positive reasons that we shall discuss another day.

Today, I choose to go with helping you grok the things to look into before taking up a term life insurance policy. The following list is built around the idea that the policyholder wants to minimize costs while offering the most prodigious protection for his/her beloved family in the future. Let’s dive into the list right away.

The Policy Period

It’s term insurance, so the choice of the period is yours, but I’ll help you choose.

You’ll factor in your age first. From their perspective, insurance companies view you as “less risky” while you’re still young, and vice versa. So taking up a policy at a younger age implies less costly premiums and higher coverage amounts. For example, if you’re at 30, you may consider a term of 30-35.

Also, you won’t desire running short of funds to pay for the premiums. So, make hay while the sun shines; take the cove while still at work (and let it last to your retirement age). I’m glad that some covers will last longer than the time you pay the premiums. For example, some covers will continue to 70 years, while you’ll only be needed to pay premiums up to 60 years! I don’t have to say that this is a go-to cover.

Insurance Riders

An excellent term life insurance will cover all if not most of the angles of risks. Insurance riders are, for lack of a better term, add-ons to the original insurance cover. While the policy is in force, you’re likely to meet other uncertainties like critical illness, job loss, disability, and so on. This is where riders come into play. So let’s say that you have a disability rider on top of the original insurance cover, the insurer will pay you upon being diagnosed with a disability when the cover is in force.

It’s important to consider such add-ons, but only if they’re likely to be appropriate to your case. Just be smart.

Concentrate On Future Family Needs

There’s a lifestyle that your family leads right now. It is the same lifestyle you want them to live in the coming years, even in your absence. Focus on this. It gives you a hint of the required coverage amount. Coupled with the right policy period and expected inflation adjustments, you’re good to go.

The Cost Of Insurance

“Cost” sounds like something that should be minimized, and that’s what I’m telling you to consider. I know you know that term insurance covers are the most cost-effective, but I also want to tell you that they can be even cheaper. Therefore, it shall do you well to scour for financial coverage by a life insurance plan before taking the plunge into any one particular policy.

Here, my main advice is that you go for those insurance companies with discounted premium rates. For example, non-smokers may get a waiver of premiums due to their lower risk rates. You should also consider other insurance expenses. Nowadays, this is even simpler because you can compare the costs online. Make sure that you don’t skip this step.

Of Course, Choose The Stellar Insurer

Here I’m more interested in the insurer’s Claim Settlement Ratio alongside many other factors. I’ll explain it.

An insurer’s Claim Settlement Ratio is its number of settled policies. You have to check on this to ensure that there’s a high chance of your claim being settled. You’ll also have to check a company’s financial background — its ability to meet its financial needs (both long-term and short-term). The insurer’s reputation isn’t to be overlooked, too. It might be having so many customer complaints, a factor that should make you leave it for another company.

The Bottom Line

While insurance is almost inevitable, the right options give you an added advantage. The tips above will certainly lead you to minimum premiums and insurance costs while helping you keep the insured amount at the peak, with the highest settlement chances. Best of luck, pals!

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