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Life Insurance 101: Everything You Need to Know

Are you afraid of uncertainties and want to secure the future of your family? Life insurance ensures that your family are well catered for after you pass.

Who Needs To Take A Life Insurance Policy?

As we’ve discussed above, a life insurance policy helps take of the people you leave behind after your death. Some of the people who need life insurance include:

  • Parents with little kids

If you have small kids and your death may mean them losing their source of financial support. It’s high time you consider life insurance to secure the future of your children in your absence.

  • Parents with special needs children or adults

If you have children who will be solely dependent on you even in their adult life, consider life insurance to ensure that their needs will still be met after you pass away.

You can stipulate for the death benefit to be put in a special needs trust after maturity and be under a fiduciary’s management for the child’s benefit.

  • Spouses 

If you are married or stay with your spouse, and together you own properties that you are still financing, your death would leave your partner in a tight spot regarding the loans and property taxes.

It would mean the world for your partner to receive death benefits from your life insurance, making it easier to pay off the debts and property taxes.

For instance, if you have a joint mortgage, the death benefits would help clear the mortgage and assist in other expenses.

  • Seniors

If you are old and your children have been through everything to give you a comfortable life. It would be great for them to receive a life insurance payout when you pass away. 

Five Things You Need to Know Before Taking out Life Insurance

  1. How much cover do you need?

Before buying any life insurance policy, you must determine the expenses in case of your death. It would be best to consider a mortgage, auto loan, tuition fees, and any other debts incurred while you are alive.

Furthermore, you are not around, so your income will be cut off, and you were the only person holding a job. 

To get a great estimate, you can consider using an online calculator to calculate the total amount to meet their expenses.

Alternatively, you can find a financial expert who will help you evaluate your financial standing, review your goals, and advise how much coverage you need.

  1. The duration of the cover

There are two main types of life insurance, term life insurance, and whole life insurance, so when buying, determine how long you want your policy to last. If you need coverage for a certain period, then term life is perfect.

But if you need a lifelong policy, then whole life insurance is your best bet. It will help cater for mortality expenses, replace your income, and cater to other future expenses for your family.

  1. Shop around

Do not just settle for any insurer, do your homework. Get quotes from different insurance companies to get an idea of which has the best offer. This is because the prices, communication, rating, and professionalism differ from one insurer to another.

So, it is essential to get a feel of different insurers to determine which meets your needs best. 

For instance, some insurance companies might be more forgiving towards specific ailments than others. Some might be willing to place you in a higher rate class than others despite having specific conditions. So, an in-depth research is crucial to identifying your best match.

You can get life insurance policy quotes from different companies by using online portals. Or you can find a trusted life insurance agent to help you shop around while providing you with much-needed advice as they know all the insurance companies and how they work.

Therefore, they are in a better position to give advice and recommend some of the best insurers.

  1. Life insurance coverage features

When choosing a life insurance policy, do not only focus on the price; look at other features. For instance, if you have taken out term life insurance, ensure that you have the option to convert it into permanent life.

Also, ensure that your insurance policy can be accelerated if you become terminally ill and allow you to receive living benefits. 

Also, pay attention to the coverage amount and whether it can be adjusted in the future and check whether it is renewable. At the same time, check the type of riders they are offering with your policy.

For instance, you are given a waiver on premium contribution if you become disabled. Or long-term care rider, where you can take money from your life insurance policy to pay for long-term care

  1. Trusted advisor and name a beneficiary

Although online tools can assist when looking for life insurance, it’s always better to work with a trusted financial advisor with deep knowledge and experience in the insurance sector.

They will help you narrow down insurance companies and advise you on which coverage suits your needs best.

How Do You Claim Life Insurance Benefits?

Life insurance claims are paid quickly, provided you supply the insurer with all the documents. The insurance company will not contact you because they don’t know the policyholder passed away.

It is upon you to reach out to them. So the policyholder needs to inform the beneficiaries of the policy while they are alive.

If you want to start the claim process, notify the insurer, submit a copy of the certified death certificate, and go through the paperwork. Ensure that you have attached all the required documentation for a speedy payout

Final Thoughts

Life insurance is a must for all people with families, especially if you are the breadwinner. Apart from giving you peace of mind, it ensures that your family is protected if you pass away.

Being the month of life insurance awareness, insurance companies have made available numerous resources for those who want to take life insurance. So, what are you waiting for? 

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