When it comes to life insurance, a lot of people get stuck on the initial question: do I even need life insurance? Surprisingly (considering the article you’re reading), the answer is not always “Yes!”, and even when it is, additional questions need some thinking too. You’ll definitely get some answers by visiting online insurance websites like Emma, but for now, you can learn the basics about life insurance by reading what follows.
The General Benefits of Life Insurance
We won’t get into the details of the different types of life insurance here since it’s not the point of this article, but we’re going to mention the main benefits of life insurance products in general. The first benefit is to provide your loved ones with more financial security in case something nefarious happens to you. Depending on the type of insurance you’re getting, you don’t even have to die for your beneficiaries to profit: some types of insurance can be used to protect your mortgage in case you get laid off, to finance the education of your children if you’re not able to do it when the time comes, or serve as an emergency fund. If you thought that life insurance was only a way to leave some money to your relatives when you die, you should rethink that and assess your options.
The Main Shortcomings of Life Insurance
The most obvious drawback when it comes to purchasing life insurance is the cost of premiums. If the money is already tight at home, it can be difficult to reach the conclusion than another monthly bill with an uncertain payout is really the way to go. The other big disadvantage is the fine print. Insurance policy contracts are legal documents that you need to read and understand fully before committing yourself to long-term payments. More specifically, you have to get a clear picture of the exact conditions and procedures regarding the payout. Misunderstanding how your life insurance payout works can throw away years of investments and lead to real dramas.
The Mistakes to Avoid
Misreading your insurance policy contracts or neglecting to ask questions regarding critical payout procedures are huge mistakes we’ve already touched on. Another one is choosing the wrong type of insurance term. You can choose either a term life insurance or whole life insurance. As their names indicate, these 2 types of policies offer respectively coverage for a fixed period or for the entire life of the insured. You should carefully assess your needs — and maybe talk to a financial advisor — before getting into one of these contracts to make sure you won’t regret it.
Next on the list is underestimating your insurance needs. All things being equal (age, sex, health, etc.), the number of your premiums determine the size of your payout. However, it’s a lot easier to underestimate the payout needed to cover the goal that led you to purchase life insurance in the first place because it means less money going out of your pocket now. Don’t. Consulting a financial advisor can also be an excellent idea here considering you’re trying to predict future financial needs without having the relevant expertise.
If you’re sure of the type of life insurance you need and the payout you should be looking for, don’t go for the first insurer who offers a product that seems to perfectly fit you need. Like with other types of insurance, life insurance rates can vary a lot from a service provider to another. Shop around and don’t let yourself get bullied by aggressive / know-it-all brokers.
Last but not least, one of the worst mistakes you can make is waiting too long to get life insurance when you know that you’ll need to get one at some point. The younger and the healthier you are, the less expensive your premium will be. Plus, some insurers can even turn their back on you in the unfortunate scenario that you get sick. If purchasing life insurance is already in your cards, play them sooner rather than later.
It’s entirely possible than nothing in your life situation warrants life insurance, but if it does or if you’re not sure… Start weighing your options today.