4 Common Mistakes in Choosing Life Insurance

4 Common Mistakes in Choosing Life Insurance

Many people are doing mistake in choosing and buying life insurance. As the result, they buy premium insurance which is so expensive but the benefits are far from expectation. How to choose the best life insurance? In our country, the owner of the mobile phone number is far more than the owner of a life insurance. Less than 10% people have insurance compared to 90% of people who own a mobile phone. Family protection does not seem important in many people. For them, gadget is more important. Naturally the quality of financial literacy is not too high, according to the survey.

Life insurance is the foundation of a healthy family finances. According to data from the Central Bureau of Statistics, 9 of 10 women in our country depends their lives on their partner. The survey finds that 60% of wives whose husbands died have lower standard lifestyle. Many people do not want to buy life insurance because they have the perception that buying insurance is expensive and wasteful.

Just choose the right products, life insurance premium is unnecessarily expensive. The most important thing is the time to buy and choosing the right life insurance. Mistake in purchasing insurance is for example, paying too expensive insurance premiums, or buying products that are not needed. Here are some mistakes done by most of people in choosing life insurance.

life insurance tips

The first mistake is not aware about the compensation and insurance coverage. The compensation is a benefit paid by the insurance company if the insured (eg husband or wife) died. How much is your compensation? Hopefully you remember. Many people do not know or cannot remember how the sum insured in the policy. In fact, the purpose of buying insurance is to protect their future. It’s important to make sure that you buy insurance according to your needs. Therefore, the sum insured should be a major concern when you buy life insurance. The value should be large enough, in line with the estimated cost of family life.

The second mistakes is too much doing focus on investment, not protection. Many people who buy life insurance more focus on the value of their investments. Understanding how the value of the sum insured is not considered, whether fairly or not to protect the beloved family. It is true that the value of investment will be added to the sum insured if the insured dies. However, we must remember that: investment is uncertain depending on the performance of the chosen instrument. In life insurance, if you choose a shorter premium payment, the value of the investment will be cut to pay for the cost of insurance premium. Therefore, although there is investment value, which can add to the sum insured, its nature is uncertain. The certain thing is the insurance amount. That’s the amount guaranteed by the insurance company.

The third mistake is less aware in buying life insurance. If the beginning states that not having a life insurance is bad, how could having life insurance bad too? The problem is that not everyone needs life insurance benefits. We first understand the purpose of having a life insurance policy, which provides benefits (to the beneficiary if the primary insured dies.

That is, there are people whose lives depend on you financially, for example, a wife, a child or parent, that if you die, they will face financial problems due to loss of income sources and need financial protection provided by life insurance. In other words, if there is no person whose life depends on you financially, there is no point to have insurance. It is better if the money to pay the premiums is allocated to the more important and necessary other things today. One of them is the pension fund. You certainly need money for retirement. According to the survey, the number of our society who has a pension plan is still very minimal. Although relying on retirement from office, the numbers are not yet sufficient. A fuller explanation on the pension fund office is not adequate. According to the survey, people still rely on financial assistance from the child when they retire.

The fourth mistake is wrong in writing insured. In life insurance, the insured is the notion that if he dies, the insurance company will pay the sum assured. Determination of the insured is not uncommon less precise. In this case, it is the husband, who is the main breadwinner, should have protection. If he is not being insured, the implication, if the husband dies, the source of income will stop, the family will receive financial protection of insurance.

Insured is a party that should provide a source of income to the family. It can be a husband and wife, as long as earnings. Ideally a family has two life insurances for the husband and wife. Many people are just buying one. It is for the husband considered to be the main breadwinner. This perspective is not right. If you are not able to buy two life insurances, choose the most substantial income. Therefore, it could be a husband or wife. Life insurance is important in family financial planning. It provides protection for the family. However, many people make mistakes in choosing life insurance. Make sure you do not make mistakes described above.

Tips for Before Buying Life Insurance Premium

Tips for Before Buying Life Insurance Premium

life insurance premium

Buying life insurance is not an easy thing. There are endless choices that can be dizzying. In each evaluation process, you will be forced to think about your death. It is not fun thing to imagine, is not it? The process might make you get high stress. Yes, the insurance agent will make you think about the worse thing in future so you will decide to take the insurance. After buying the insurance policy, you could feel your life much better. You need to choose the right choice so you could get the benefit as you want.

If you are the first-time buyer, you should be careful when choosing the right insurance. You need to find the right policy. Some people think that all policies of life insurance are same. Actually, there are some options of the policy. The main types of policy are term and whole. To make sure your option, you should consider them all.

With term insurance, you are covered in certain period of time. If you could live longer than the expired date, the policy will expire and nobody get your death benefit. If you want, you can purchase a new term policy. The policy of term insurance can run for 10, 20, or 25 years. The payout will remain the same you die in year 10 or year 5. A term insurance pays out if you die during the term.

If you take a 25-year policy and you die in year 26, your family won’t get anything.Whole insurance is typically more expensive. With whole insurance, you will be covered until the day you die. The recipient could get your death benefit. Most insurance agents will say that you will get great benefits after buying whole insurance. But, some finance experts will suggest you to buy term insurance. Before deciding the best one, you need to compare them. Most people need life insurance for twenty up to thirty years.

You should also consider the coverage of life insurance that you need. The amount of coverage must be selected based on your budget and your circumstances. If you live with four young children and big mortgage, you will possibly buy more coverage than someone who lives with two children and a small loan. Some experts recommend that you should make death benefit no less than 6-8 times of your annual salary.

If you can earn $80 each year, you should make insurance policy worth no less than $480. But, this is only a theory. You may need to discuss the proper amount with your financial advisor and family. The proper amount will vary based on each person’s situation. You should think about several factors in the future costs. When calculating the coverage you need, don’t forget the school fees of your children, home improvement costs, etc. But, do not overestimate since it can make higher premiums.

You should consider the insurance company

Make sure that the company is legitimate. At these days, you should be careful with any kinds of scam. It is better for you to know the profile of the company. All life insurance companies are not equal. Each company has certain rules. You should also learn the rules. Insurance company provides a range of add-ons to the policies. Critical sickness is one of the most familiar add-ons. It can give precious benefit, but it will cost more than the actual insurance. An adviser will give the details of the options and tell how the policy works.

You need to review your insurance policy regularly. Revise the policy if there is a change to your circumstances. The changes can be the birth of a child, increased debt, and a change in occupation. Do not forget to cover your main outgoings, including outstanding credit card, loan, and mortgage. It is usually more expensive to buy life insurance when you are older.

To acquire a mortgage you will frequently need life insurance, especially when your partner or children are relied on your income to pay the mortgage. You are recommended to get the insurance policy separately from the mortgage. It is also important to buy separate than joint policy. Buying separate policies is often believed as a better option. A couple may be persuaded to purchase a joint policy that consists of 2 single life plans. It is important for you to get an advice before making the decision. A Joint policy is regularly cheaper. But, it will pay out once if one of the couple passes on. After the payout, she/he would cost more to buy a new policy since her/his increased age.

The cost of the insurance will depend on several factors like the amount of cover, the type of policy, and some extras. Before setting the premium, the agent will ask several detailed questions including your age, state of health and occupation. A 52-year-old smoker will surely pay more for the premium than a 35-year-old non-smoker.