Are you confused about what questions to ask when you are buying a life insurance plan?
It’s no secret that the whole process of buying a life insurance plan for first-time buyers can be daunting. This is because life insurance policies are usually lengthy and full of industry-specific terminology. This makes the documentation difficult to understand for an average person. Moreover, there are so many stories about how life insurance agents tend to share half-truths about a life insurance policy with customers to make the policy seem far more attractive than it actually is.
This is why it’s important for every customer to be well-prepared and well-informed about all aspects of a life insurance plan before they sign up for buying it. The last thing you want is to be paying high monthly premiums for a plan that provides you minimum coverage. Continue reading this article to find out the key questions you should yourself and your agent before you buy a life insurance policy.
How Much Life Insurance Coverage Do You Really Need?
The first and most important thing to ask yourself before you buy a life insurance plan is how much life insurance coverage you really need. When you are trying to calculate this amount, you should take into consideration all the expenses that you are currently responsible for or could be responsible for in the future. This includes things like a mortgage, credit card, car loan or any other debt. Moreover, you should also think about the number of people who are financially dependent on you and the amount of money they would need to continue living comfortably. This will help you estimate how much life insurance coverage you really need.
How Long is the Life Insurance Coverage for?
The second thing you should inquire about when buying a life insurance plan is the length of coverage that the specific insurance plan is offering. Life insurance plans come in two different categories. The first category is permanent life insurance which gives you coverage for your whole life. The second category is term life insurance which gives you coverage for a pre-decided duration.
Buying a permanent life insurance plan comes with the benefit and satisfaction of having lifelong financial protection. This means you will never have to worry about going through the whole documentation process again. On the other hand, buying a term insurance plan means you will only financial protection for a specific period of time. You can choose the term to be as long as ten, fifteen, twenty, twenty-five or even thirty years at one time.
How Much Will the Life Insurance Coverage Cost You?
The next important question to ask is how much this life insurance coverage will cost you. No matter how financially stable you are, you should always be clear on the amount of money you’re signing up to pay monthly for so many years of your life ahead. Life insurance policies have differently monthly premium costs depending on the coverage you want. Many personal health factors also come into play when an insurance company is deciding your life insurance rates. Your age, gender, occupation, lifestyle, health history, and family history all affect the insurance rate a company charges you.
Hopefully, this article has proved to be useful and has guided you in the right direction for knowing the things to inquire about when buying a life insurance plan. Never be afraid to ask questions because buying a life insurance plan is a long-term financial commitment so the more you know, the better it is for you.
