How to Choose a Life Insurance Policy?
Life insurance policy sales have increased rapidly in the last few years. However, many people are still not protected properly, because the process of doing research and choosing the one that matches a particular family setting can be a very tedious job. There are too many options and sifting through all of them to find the right one can be very time consuming. It is one of the most affordable ways to protect a family’s income in a worst case scenario or event. Statistics reveal that about 1 out of 29 children lose a parent before they complete their full time education. Through life insurance, one can protect their children and at the same time save thousands of pounds.
Does everyone need a life insurance?
Having to choose one that suits one’s need from a plethora of choices can be bewildering One thing to keep in mind though is that, one should not buy it if there is no need for it. Life insurance needs vary depending on an individual’s personal situation. If there are no dependents, one may not need a life insurance. If one does not contribute a significant percentage to the family expenses and the cost of living, one may not need an insurance policy.
How much insurance does one need?
There is no rule of thumb to determine how much insurance a person needs. This depends on many factors applicable to one family’s situation – other sources of income, the debts in the family, number of dependents and the lifestyle. A general estimation is between five and ten times the annual salary.
What type of policy should one buy?
There has always been an ongoing debate on whole versus term life insurance policies. Some experts suggest that someone under 40 years of age, without a life threatening illness or family disposition, must go for a term insurance policy. This offers benefits in case of death but no cash value.
Whole life insurances features both cash value and benefits at death, but it costs more than a term life insurance. In the first seven years, half of all the cash value is surrendered. This makes the coverage very costly since the huge fees and commissions limit the cash value annually.
When choosing a policy, buyers should use educate themselves about the basics of life insurance policy basics, through internet resources or books. When they are equipped with the basics, they should find a broker they trust and get the policies he recommends evaluated by an insurance advisor. Some expert financial advisor believes that, people seeking an investment should not buy a term insurance policy. In short, an average person should be buying a term policy and not a whole life insurance policy.more information