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Super tips for making a Life Insurance investment
by: Justin Harrison0008
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Super tips for making a Life Insurance investment
Life insurance is a very important investment. What you secure is that by paying sums of premium during the course of your life, you ensure that your near and dear ones are promised a total sum after your death. So, if you do not make the investment carefully it can have devastating effects for you and your near and dear ones too. So, if you have decided to make that step of making a life insurance investment, the following tips will help you make the right choice.
Tip 1: Get to the best Broker
We are all specialized in some subject and insurance may well not be your area of expertise. If this is the case, a good, experienced broker could be worth his or her weight in gold. They normally have agency agreements with all the large insurance companies, so you will gain access to many different products through a single window. Also, brokers tend to be prudent about the guidance they provide, because they can be sued under South African Law if they aren’t.
check their credentials, in case of any doubts because reputable brokers are normally registered with one or more of the professional insurance associations in our country.
Tip 2: Get the best insurance plan
‘Different courses for different horses’, as the old proverb goes. In life insurance parlance it means that all policies are not beneficial for everyone.
To give you an idea: Should you require life cover until your death, you may want to opt for whole life cover instead of term life insurance. If you want to add a savings portion together with some other benefits on top of your life cover, a universal life type of product could turn out to be the better option for you.
Spending some time with your broker pondering over exactly what it is that you specifically need and looking at the various choices offered to you, will be beneficial for you and your investment.
Tip 3: Invest the right amount
The right amount of cover is determined by the sum you want your survivors to receive after your death, the cost of winding up your estate, your assets and liabilities, and the value of other life insurance that you may already have in place. Buying too much cover will result in you paying more than is necessary and buying too little could result in your family suffering financial shortfalls after your death.
Your broker can perform an in depth analysis to help you establish exactly how much additional cover is required to meet your demands.
Tip 4: Buy insurance that you can pay
The premium you pay depends on the amount of cover you select and several risk factors such as age at the time of insurance, health and medical history (including family history), tobacco use, etc. If the premium is beyond your means, consider dropping some of the benefits you may have added to the policy, such as trauma or dread disease, before cutting back on the amount of cover you have selected.
It is very important that you can comfortably afford to pay the premium. If not, the policy will eventually lapse, leaving your family without any cover at all.
Tip 5: Analyze the various offerings
Not all companies are equally cost effective on all policy types. Some companies specialise in term life policies, others in whole life policies; while others still have the ability to offer universal policies at a more competitive rate than the rest.
If you use a broker, he or she will obtain quotes from the various insurers and help you to compare these on a feature-by-feature basis. Brokers also normally know which insurance companies’ finances are sound and which are particularly efficient when it comes to settling claims. What you expect from your insurance policy may be a decade away but you surely expect the company to hand you the check when it is promised.
Tip 6: Get add on benefits rather that buying many policies
If you are thinking about getting insurance for dread disease, functional impairment, etc., you could save money by adding these benefits to the life insurance policy you are about to buy instead of buying discrete policies for each type of cover.
Tip 7: Decide on going for a rider
A rider affords you the opportunity to periodically increase your life cover by as much as 20% without having to prove your health. If you don’t select a rider, you will need to go through a medical examination and blood tests each time you want to increase your insured amount. If your health happened to have deteriorated since your previous medical examination, you could end up paying a higher rate for the cover than would have been the case had you opted for a rider.
Understand your policy
Once you have purchased your life insurance policy, do remember to review and understand its provisions. South African law gives you a 30-day cooling-off period. Within this period, you have the right to cancel the policy without incurring any penalties at all.
About the Author
Justin Harrison is author of this article on Life Insurance. Find more information about Life Insurance here.
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