Life insurance – frequently asked questions
How do I determine how much insurance I actually need?
In the event of untimely death, a person will need to consider various factors before making a definite decision about the amount of the insurance needed. The first thing that is used as a measuring device is the number of family members and the possibility of college for your children. Also, economy will definitely change and effects of inflation will have to be considered if you are to provide a financial stability for the beneficiaries.
What will I get from my life insurance policy?
Life insurance policy will come in handy when it comes to paying some major expenses that can include scholarships and tuitions, estate costs and mortgages, or they can be extremely convenient in the event of emergencies, retirements or job lose. Since there is more than just one kind of life insurance, a person can chose the one most appropriate for his or her need and according to the subclasses which the user can select your life insurance can also be regarded as a source of extra income. This is because there are possibilities of early withdrawals, loans, etc.
How do I make a decision which insurance company to use?
The best way to approach this is to actually verify the insurance company track record and to ensure that the insurer you have chosen has a good claim history, excellent customer service and competitive prices. You can ask for referrals from your friends, browse official insurance company sites and make calls to the customer support service and prepare a list of questions that you would like to ask.
How much will life insurance cost me?
Insurance companies have different rates for different people and the amount of the premiums will be determined by following factors: age, gender, body weight, height, health and medical history, whether or not a person is a smoker, participation in risk activities, travelling history, medication abuse etc.
The form of the policy will also have the effect on the price that you pay and terms insurance will have lower rates than other variations, especially at the beginning of the policy duration. On the other hand, whole life insurance rates are higher in the initial stages, but do not increase over the years. There is also a possibility to choose between monthly and annual instalments which can also change the amount of money paid, since opting for monthly or quarterly payments results in higher premiums.
Is there a way to save money when buying life insurance policy?
Yes! One way is to get the insurance as soon as possible since the older you get, chances of developing a health condition are increased and premiums are getting higher. Also, you can start with taking term insurance first, since there is a conversion option and you are allowed to trade it for a permanent life insurance later on. Third option would be to consider a group life insurance that you can get through your employer.
What are my options if I already have the insurance coverage?
If that is the case, it would be a great idea to actually review your coverage from time to time and verify that it is still suitable for your situation. Maybe a different type would be more appropriate to your current life style and living arrangements. The situations that require a life insurance type review are most commonly divorces, recent marriages, child birth, adoption, retirements and so on.
How will a life insurance affect my taxes?
In most cases, death benefits, policy loans and withdrawals are income tax free. Nevertheless, if you surrender the policy (or it lapses), the distributions exceed the basis of the policy, in which case you should enquire with the taxation office.
Is there a possibility for me to actually trade or replace my policy?
This is always an option but, you need to be careful since policy changes often imply new underwriting and modification of the payments. If you decide to change the insurance company as well, you need to be aware of the fact that different insurers have different policies and all of that increases the risk of losing the cash value, having a decreased the contestability period etc.