There are different types of life insurance products available in the market such as term life insurance, whole life insurance, universal life insurance, etc. However, if you are looking for maximum coverage at an affordable premium, a term insurance policy is the best bet for your family.
What is term life insurance?
A term insurance policy provides pure coverage, i.e., there is no savings or investment component involved here. With a term insurance policy, you pay premiums regularly to your insurer during the policy term. In case of an unfortunate eventuality, your beneficiary receives a payout from the insurer. If you reach the end of the policy term, your policy expires, without you or your beneficiary receives a payout.
Things to consider when picking a term life insurance policy
- Policy Tenure: The longer your policy tenure, the more you will have to pay as premiums. Before you opt for a policy tenure, you should evaluate the purpose of buying the policy. If the policy is being bought to financially protect your loved ones until your retirement, you should opt for a term that lasts up to your retirement.
- Coverage: The coverage that you opt for will determine the payout that your beneficiary will receive in case of an untimely eventuality. Ideally, when opting for the coverage amount, you should consider factors like your current take-home income, the financial needs of your dependents, and your current savings and investments.
- Shop around: Once you’ve decided on the policy term and coverage, it’s a good idea to “shop around” for the most competitive price. The cost of the policy is likely to vary from insurer to insurer based on their yardstick for calculating risk. The best way to go about comparing insurance policy quotes is by using a thing-party online broker or contacting an independent insurance agent. Keep in mind that when purchasing life insurance, the cost of the policy is not the only thing you want to look at, make sure to also consider the financial strength of the company.
- Re-evaluate your insurance needs: Every few years, it is a good idea to reevaluate your insurance needs. There’s always a chance that you may need more coverage in the future than you do right now. In this case, you can always take on an additional term life insurance policy.
- Minimize risk: Did you know that the state you reside in has a guaranty association for life insurance companies? This regulatory measure ensures that your policy’s payout is guaranteed, at least for up to a particular limit, even if the insurance company ceases to exist. This guaranteed payout limit varies based on the state that you reside in.
A life insurance policy is meant to give you peace in mind, in knowing that your dependents are financially protected. Make sure to pay your premiums on time to keep the policy active and enjoy continued coverage.