Checklist for Buying Life Insurance

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  • Post last modified:December 24, 2019

Savings have remained the most essential part of life. Some people plan it to buying a new house, a car or for starting a new venture. Nowadays, we have multiple types of life insurances giving the best policies to keep some money aside and secure future.

Couples purchase this to secure the education budget for their kids. However, everyone is entitled to their needs and requirements. For now, if you are also the one looking for a life insurance policy.

Make a checklist of the things you need before going to the insurance company.

Learn about it and decide as per your needs.

Why is Life insurance Important?

Life insurance is for the people who don’t want to be a burden on their loved ones. They want to manage their lives and be there for their loved ones even after their death. It is the lifetime savings to secure their kids, making sure that your children don’t feel a burden for your medical expenses.

Also, they don’t get worried about the expenses of a funeral or any debts you might have left. So, if you see, there are many benefits to purchasing life insurance. It is all about the security and safe future of you and your children.

What Do You Need to Know About Life Insurance?

Sometimes people mistake by buying the insurance in a hurry. They don’t think about the purpose and go buying it as the agent convinced them. This kind of policy becomes irrelevant to the buyer as they are no worth to the buyer and merely benefiting the interests of the seller.

So, before you go any further purchasing life insurance for the security purpose. You must be careful and know about the basics of the policies to be sure about the decision.

Let’s see the things that you must look upon for life insurance.

Life Insurance Checklist at the Rescue 

Even when people shop online, they check out the reviews, their budget, quality and a lot more. Similarly, when it is the matter of lifetime saving, how can you be careless about it? Isn’t it something more valuable than a purchase of a crockery item?

Of course, it is because it is about life and nothing is important than keeping it safe in terms of both health and finances.

#1. Check Your Finances

Your budget and your finances are important. Analyzing your financial needs and goals is the first thing you have to consider for the policy.  Remember that it is a long term plan you will need a huge amount of coverage you require to pay the premium. Keep your financial responsibilities and net worth in mind.

Calculate everything, even includes the rise of inflation in the town. It is something that can become your nightmare. So, make sure that you have enough finances for both the daily needs of life and payment of the premium.

#2. Be Clear About Why You Need It

Rushing into buying a policy is the huge mistake that most people do. You got a call from an agent, and he ends up convincing you about buying a policy without considering the real reason behind it.

You maybe be taking it for the children’s education, funeral expenses or to insure a house or a car. Reason can be anything, but you need to be clear about it. Don’t go for the insurance if you don’t know the answer to this question.

Define your objectives and ask yourself if this is the lifestyle you are willing to live?

Would you be left with enough finances after cutting the cost of premiums?

So, make sure you know two things about it:

  • Purpose of buying a life insurance
  • The clarity in your life goals

#3. Who Will Be Your Beneficiary?

The next step is to know about the beneficiary. There are different scenarios; most people hold their spouses or kids to be the beneficiary of life insurance.

In rare cases, children buy insurance for their parents and at that time, they need to take the consent of parents before taking this step. Do not keep your beneficiary out of it. They must know and give consent before you make them a beneficiary.

You can also have more than one beneficiary – considering the unexpected events of life. So, other than a spouse, children or a relative, you can consider your friends as a beneficiary too.

#4. A Thumb Rule

If you will ask the experts about life insurance, they will tell you the thumb rule too. Yes, the basic rule says that the benefit of the policy should be equal to seven or ten times your annual salary.

Till now, it is the rule of thumb that is giving accuracy in calculations. However, it may not be as accurate as you expected. Still, you need to calculate the income you want your beneficiary to get.

So, calculate the expense considering the pension, retirement, social security and anything else that is your need. Keep all this in mind and then calculate your policy accordingly. Now, the choice is yours, you can go for a thumb rule to calculate it another way.

#5. Plan Retirement

Sometimes we are so busy making a life for the children that we stop living it for ourselves. So, the retirement plan is something that fulfills your needs and gives you the life of your choice. It can also be health insurance or a plan sounds like fun to you in old age.

If your finances allow you, there is no shame in buying the retirement plan. Yes, it is a great option for living an old age life without any worries. A good retirement plan will serve you more than your expectations. So, plan your insurance for the great plan.

#6. Get a Reputable Company

Now when you know everything about the insurance policy, you need to find out the company with a good reputation. Usually, banks have associated companies with them. You can opt for them or find out some other companies with good reviews and do not forget to take the personal opinion of their previous customers.

Know the reviews, talk to someone who has availed the policy from them and know the types of policies they are offering. Check the background, gather some details and be aware of the fraudulent.

#7. Compare Different Quotes

The very next thing that you need to do is comparison shopping. You are for buying something valuable, and it has to last longer than your needs. So, do not settle or compromise for less. Just compare different prices and conditions to be sure that the one you are buying is according to all your needs and requirements.

Every company comes up with their prices. You must know that these quotes vary according to the facilities you get against the policies. When you are comparing the quotes, know about the benefits too. It will help you make a better decision about purchasing the policy.

#8. Don’t Forget to Ask About Renewal Options

Renewal options are a necessary part of life insurance. Make sure you get to confirm it too. Some policies are renewable if you are under the age of 70 – 75, but you need to ask it from the agent.

Sometimes, they require the medical to renew the policy. Also, if your premiums will change in the renewal of the policy or not? Confirm about the new guarantees, premiums and medical before you purchase the policy.

#9. Conversion Options & Restrictions for Policy

Life is a series of unpredictable events. When your life changes, your life insurance needs to change too. So, consider the fact that you might want to convert your insurance policy by the time. Always ask your broker about the conversion options.

Take an example of the policy, you took to pay the mortgage and cover the education of a child. Now, when both of the things are done, you might want to convert your policy into something that will benefit you for the rest of life.

#10. Can You Have an Alternative?

After knowing everything about the insurance policy, the very common question that crosses everyone’s mind is that “Can you go for an alternative”?

Of course, you can choose an alternative for savings. But how can you be sure that those ways of saving can serve you better than the policy?

It has to be better than the choice of the policy otherwise, alternatives are pointless. Some companies or banks also offer mutual funds or fixed bank despots too. So, it is up to you and your needs that what suits you the best.

Wrap Up

Finally, just be aware of all the factors involved in the purchase of life insurance. Having enough money to pay the premiums is not the only requirement of it.

So, find the company or broker you trust, and never ignore a single point of the policy. Always, stay aware of the important factors about it.

Linda Chavez

I'm a burial & senior life insurance expert, independent agent, Founder & CEO of Seniors Life Insurance Finder. I have been working in this sector since 2004 and established my own company in 2014. I have a team of seven members, and we are trying hard to share the knowledge we've gathered. We know how difficult often it is to find an affordable policy. Hence, we are doing our best to help you.