The costs associated with life insurance usually make a lot of people think twice about investing in a life insurance policy. 16.7 % or 50.7 million people are believed to be without insurance in the US. In fact statistics reveal the following reasons about why people do not buy life insurance:
- 53.3% out of those 50.7 million did not life insurance because of the costs involved.
- 27% opted out of buying life insurance because they changed jobs or lost their jobs.
- People who are either very rich or very poor do not buy life insurance – either they already have the money to safeguard their families or they cannot afford to set aside money for premiums.
- Most households which have an income below 20,000 USD per month do not have life –insurance, considering hat they are the ones that need it the most.
States ought to enforce laws that force people to invest in life insurance. The benefits are so numerous that people should be more educated as to how life insurance can resolve uncertainties of the future. The earlier you decide you want life insurance, the better it is as far as premium rates are concerned. There are several ways of making people aware of how life insurance can help them. For example:
- State sponsored education programs on the benefits of life insurance – factual, not promotional at the last year of college.
- Every company can provide information on the life insurance options they offer to the employee as soon as he is recruited.
- A compulsory rule or law that forces people to have some sort of life insurance before they are 30 years old.
- Incentives to people who enroll before they are 30 – like a discount or special offer.
Is there a concept of ‘one size fits all’ in life insurance policy investment?
This is absolutely untrue as far as life insurance goes. The extent of coverage that you need depends on various factors such as:
- Affordability levels – how much premiums you can afford per month.
- The final amount you are looking at – What is the correct amount that would eventually be needed to take care of your family after your death?
- What specific benefits are you looking at? Do you want only protection or are you looking at the savings potential of your life insurance policy too?
- What time period are you looking at? When would you like your payments to wind up?
Whatever the interplay of factors that determine the extent of coverage that you would require, there are broadly three types of insurance that we are looking at:
Whole life insurance – This is when you pay a fixed amount over a fixed period of time. The premiums for whole life insurance are always more expensive so life insurance agents are very fond of selling these policies to earn juicier commissions from the companies. Make sure you buy it because you want to and not because they want you to.
Term life insurance – This kind of insurance is very popular because of its more affordable nature and its ability to be flexible. Here, you opt for life insurance that covers a particular period of time like say for 5 years or 10 years or 15 years. When the time period lapses you can renew your contract (or alternately opt for other policies) for the next ‘term’. This kind of insurance costs a lot less than whole life and is as effective so clients usually opt for this one over whole life policies.
Universal whole life – This is a more flexible version of the regular whole life insurance policies. You can adjust your policy final amount by reducing or increasing it as well as pay premiums which vary in their amount and their time intervals. You also have the option of paying in a lump sum in the policy.
There are several hundreds of companies right from big ones to small bucket shop ones that will claim to weave magic for you. Before signing on take time to evaluate the policy, the company and what they are offering. Insurance providers are adept at talking a client into buying a policy that has more small print than benefits. You may take the following steps to choosing the right company:
- Keep your requirements constant when find out quotes from different companies.
- Make sure you find out and understand what the policy does not cover.
- Stick to A rated companies on online company evaluation sites.
- Check on the financial stability and claims handling record of the company you are looking at.
- Ask other people if they have had experience dealing with the company you are considering.
- Hire an insurance agent to clarify your doubts. They are qualified and trained professionals who will know what information you want.
- Make an accurate list of your incomes, assets etc and your current and future expenses to get an idea of the final amount that you would insure your family for.
- The cheapest deal is not always the best.
- Look for companies that offer policies that will act as a saving platform as well as insurance policy incase you outlive your policy.
- Companies that offer riders on current policies are better choices.
- Look for companies that have an office, contact numbers, email Ids and real people working for them. Visit their premises to judge what you think of them.
Make sure you give all authentic and upfront data to your company. False information could negate your policy at a later stage. Have all your documents from IDs to salary certificates to medical exam results available.
Workplace life insurance
If your employer offers life insurance to his employees, consider investing in it as group insurance policies tend to be more affordable while offering a comprehensive cover to employees. Get information about what happens if you change your job.