5 Important Questions Everyone Must Ask Before Picking a Life Insurance
Since everyone keeps raving about the importance of Life Insurance, it is imperative that we understand it. When you don’t know everything about life insurance, you are likely to be confused. The huge variety of options in the market further add to the confusion, and you may end up putting your money in a place without knowing what it offers in return.
To make sure you know what you are doing and where you are investing; here are the important questions you must answer before picking a Life Insurance.
Question 1: What is Life Insurance?
Life Insurance is concluded to be an investment for the future but it is important to understand why.
Life insurance is not like shares and trading; it isn’t an investment in bullion or property. It is the financial protection of a life.
Life Insurance, upon the death of the policyholder, guarantees benefits to the beneficiary in the form of a lump-sum amount or as a monthly pay-out.
This enables the policyholder’s family to be financially stable even after their death and averts a sudden economic blow while they deal with the emotional cost of the unfortunate event.
Life Insurance offers coverage of liabilities upon death and tax-benefits while alive. It is important to know the terms of the life insurance you buy.
Question 2: How Much Insurance Cover Do You Need?
When you understand how insurance works and what its purpose is, you realize you do not need to get the insurance that offers the highest cover.
Often, these will have high premiums and you will struggle to maintain the quality of life you desire while trying to secure the future.
When you do not require that much cover, paying such an exorbitant premium for your Life Insurance policy will make life difficult for you.
The right cover for you has to be calculated by you, based on what amount of money would the beneficiary need for a year or two if you were to pass away.
Computing this expense will help you see how much insurance cover you need, and your premiums will be decided accordingly.
Question 3: How Reliable is The Company?
Making payments to a source that is not reliable is foolish, since you don’t know where your money is going. Before you make a commitment, do your homework.
You must find out how long the company has been in business, its size, and its ratings, before you even consider it. Moreover, you must check out their financial status by looking at their fiscal ratings.
The brand value of the company is very important because you cannot give away your hard-earned money away to an institution that no one trusts.
You must also know about the Claim Settlement Ratio (CSR) of a company. CSR is simply the ratio of claims approved to the total number of claims filed in a year.
This will help you understand how reliable your Insurance provider is.
Question 4: Does The Policy Provide Living Benefits?
Life insurance is essential for when you pass away. But, well, what if you don’t?
Before getting a policy, find out about its term, premium rates, payment options and frequency, death benefits, and also about the kind of benefits the policy provides if you live through the policy term.
Policyholders should also know the procedure to borrow against their policy in case they need a loan.
It is also crucial to know what benefits the policy can offer you in case you are disabled in the future.
Question 5: What is The Company’s Claim Settlement Procedure?
The purpose of a life insurance plan is to provide financial security in case the policyholder untimely passes away.
A hassle-free claim procedure is imperative as that is what proves the worth of a policy. A policy is, inarguably, as good as its claim procedure, regardless of what cover it offers.
The settlement procedure should be easy and convenient. The Claim Settlement Ratio of the company should be satisfactory.
It should be clear who gets the benefit if there are several nominees to a policy. The company should not take too much time to settle the claims either, which is why, one must know the average time taken by the company to the settle the claims.
Every question that you can conceive must be asked and satisfactorily answered.
Your life is precious and no amount of money can redeem the loss of a loved one. However, an insurance policy is supposed to provide sufficient cover and protection in such a case.
Hence, while you are living, you must invest in an effective policy.
Knowing all the features of a policy, and comparing it with others, is going to help you in making an informed choice, which will pay well in the long run.