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Everything You Need To Know In Buying A Life Insurance

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life insurance is like an umbrella

Purchasing a life insurance cover is an important financial investment. It can protect your loved ones from the eventualities of death. Life insurance can also ensure that the beneficiaries have enough money to cater to their needs when you are gone.

Unfortunately, buying such a cover may not be a walk in the park. It may need that you learn more about the cover and the provider. Such info is vital and will help you make up your mind before parting with your hard-earned cash. To do this, it may need that you do some research on the providers and their terms. It may also require that you consider the needs of the beneficiaries. Here are vital things you need to know about when buying a life insurance cover.

The Time you Need the Coverage

Life insurance is normally designed to last for a given period. This type of cover is referred to as term life insurance. Other types of cover may last for a lifetime. They include universal life and whole life insurance. So before you choose a cover, you must gather more info about them. Typically, aspects such as the time the kids need before they grow into mature and independent people may need to be studied. If they are in school, you may need a cover that will last until they finish their college education.

life insurance hollistic

The length of the mortgage

Buying a house is one of the first investments people make immediately they start working and building his or her family. Unfortunately, at that time, most of them will not have enough money to buy a house. So they may resort to bank financing or developer’s in-house financing where the property itself is the collateral. If they finance the purchase through a housing loan, it means that they may need to spend the better part of their working lifetime servicing the debt. So it can be a big blow if they breathe their last before they complete paying the balance. If it happens, your family may lose the house to auctioneers. This is where a life insurance cover comes in. Buying a cover that runs up to a year after you finish paying the loan is vital. It makes you rest assured that the insurer will pay the debt if you die. So knowing how long you will take paying the loan or mortgage is important.

The Amount of Insurance Cover Needed

How much life insurance you need is an important factor when considering taking the cover. You need to know about the expected needs. The number of people who depend on you can assist you to determine the cover needed. Besides, their age and education levels are important factors. Also. You will need to look at your level of debt when determining the amount of coverage, you need. Liabilities such as a car loan, mortgage, and credit card loans are some of the things you may need to gather information on. It will help you calculate the amount of coverage needed.

Learn more about Income Replacement

Other than liabilities, income replacement is one of the things you may need to consider when deciding the amount of coverage, you need. If your objective is to have the cover replace your income for the period they will live, the amount of coverage needed must be substantial.  Other factors you may need to know more about including the current education levels of your dependents and the things you would wish to be done when you are gone.

Know the Reasons for the Cover

If you want a cover that you can use as your savings, then it may be necessary to look for insurers that offer policies with a cash value. Learn more about the rate at which the cash value increases over time. Besides, some covers will have both the death benefit and the cash value. Learn more about how the cash value and the tax implication. Have a detailed discussion with the provider to understand ways the cash value can fit in your financial portfolio.

life insurance protects family

Know more about the Beneficiary

Although the beneficiaries may not play an important role when buying a life insurance policy, they are never the less important. Information about their age and address could be vital. Note that some policies will not allow you to name minors as beneficiaries. The age status may deny them a chance to receive the benefits when you breathe your last. Also, you may need to avoid naming your estate as the beneficiary because of tax implications. So, learn more about the requirements the providers may want the beneficiaries to meet.

The Process of Buying a Cover

Before you settle down to a particular provider, it may be necessary to seek some independent advice. It will guide you through the life insurance policy buying process. Learn more about the requirements that must be met for the contract to be valid.


Peso Tip: Here at Filipino Peso, we will be giving you pieces of advice to gear you up before choosing your insurance provider.

Premium Frequency

How often you will need to pay the premiums is critical. It will help you decide whether you can afford the cover or not. Some insurers will allow you to pay the entire amount of coverage in one lump sum. Others will want you to pay it in regular installments. In some cases, you will need to pay annually while some companies will wish to the premiums paid monthly or quarterly. So, you need to know how your provider wants the premiums paid.

Learn more about Insurance Riders

The insurance industry is becoming more competitive. Thus, a few companies have add-ons referred to as riders. Knowing the specific riders, your company offers could help you. It may help you decide whether to buy the policy or not.

How the provider settles the claim?

The primary responsibility of an insurance company is to settle the claim upon the happening of the risk covered. We would bet that every person planning to buy a cover would purchase one from a company with a high settlement ratio. You need to get these details from the regulator and people that have benefited from the company.

To learn more about insurance, you can take a look at our Insurance page to check more relevant articles.

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