Life insurance is a big but effective investment in your life. There is no gainsaying that life insurance benefits us in different ways. However, on certain occasions, getting the most appropriate policy for your requirements becomes difficult. The task becomes simpler when you ask questions to the life insurance carrier to determine which type of policy suits you the most and the reason why you should have a life insurance policy in place. Given below are some frequently asked questions about life insurance that you should ask yourself and also the carrier:
1) Why life insurance is necessary for you?
You can use your life insurance policy for securing your near and dear ones. They can finance the household expenditures and pay off any outstanding loans even if you are not there. If you are a married person, then your unprecedented death will benefit your partner.
2) How life insurance functions
Life insurance offers a payout to your dependents or beneficiaries in the event of your passing away. Despite the fact that you are not there, the survival of your spouse and kids is taken care of. Particular life insurance policies come with regular monthly income schemes in place of a one-time amount.
3) What are the different types of life covers?
Life covers can be broadly categorized into the following:
Whole life cover
Under the whole life cover, the policy remains valid till the time of the policyholder’s death. Otherwise stated, the payout is an assured sum.
Term life cover
The term life cover offers benefits if the insured person passes away before the expiry of the term of the insurance policy.
You as a policyholder have the option of tailoring your cover to fit your requirements. An instance will clarify this. The sum assured can be hiked in proportion to inflation.
4) How much cover do you need?
This is entirely dependent on your individual financial condition. If you have loans and need money to finance your kids’ education, then you obviously need a big cover. The sum assured might vary on the basis of the number of dependents and their ages. A standard guideline is that the sum assured should be equal to ten times your yearly earnings. If you are looking for a bigger payout, you need to pay more on your premium expenses. Any modifications made in your policy will attract higher premium.
5) Is insurance through your employer adequate?
Some employers might arrange relevant life cover for the employees who pass away during their employment. The agreement will contain all the information. Therefore, you can verify if the sum assured is sufficient.
6) How long should your policy be?
Your policy should be long enough to the point where you see your kids become adults and begin earning money.
7) How is your premium cost calculated?
The calculation of premium depends on a number of factors like the following:
- Your age
- Your job
- Your post code
- Your gender
- Your health
- Standard of living
Normally, males attract higher rates of premium than females.
8) How can you lower your premium costs?
You can reduce your premium expenses by raising your deductible or out-of-pocket expense. The younger you are, the cheaper the insurance policy will be. If your health is in good shape and you are a non-smoker, then you can easily avail an affordable rate of premium. The type of policy is also a deciding factor of premium rates. Whole life policies are typically costlier than term life policies.
9) If you have a pre-existing medical condition, what should you do?
Don’t suppress facts regarding a pre-existing medical condition that you have. Your premium might be high as a result, but your suppressing of the facts will make the policy void.
10) Are add-ons allowed in my policy?
Yes, certain policies allow including add-ons like critical illness and some policies don’t. If the insured person is diagnosed with a critical illness, then he is entitled to receive a one-time payout.
11) Do you need a separate policy for your spouse?
A joint life policy can cover both, but benefit will be received only for one death.