50 Connect | 4 Life Insurance Tips For 1st Time Buyers
4 Life Insurance Tips For 1st Time Buyers
Posted on: 09 June 2020 by Dawn Richard
Life insurance isn’t as complicated as you may fear. However, in order to get in right, there are a few things you need to keep in mind. Here are some helpful tips for people buying an insurance policy for the first time.
1 - Choose the right type
There are many different types of life insurance policies, but what you need to decide first and foremost is whether you want temporary or permanent policies. In technical terms, a “temporary” policy is called term life insurance. And a “permanent” policy is called whole life insurance.
You see, the main point of life insurance is to replace your income in case you pass away, which ensures the financial stability of your dependents. If your first child will be born this year, for example, it might make sense to get a policy that will last 30 years, with the expectation that your children will be able to support themselves by the time your coverage runs out.
However, if you have a spouse who depends on your income, a whole-life policy might make more sense. It all depends on your needs and expectations for the future.
2 - Decide on the payout
One of the things you’ll have to decide when shopping for life insurance is the size of the payout. In other words, how much money your family will receive if something happens to you. Opting for a bigger payout means you’ll have to pay bigger premiums, so if you are on a budget, the value of the premiums might be the biggest limiting factor when choosing your payout.
Assuming you can afford it, specialists often recommend that you choose a policy where the payout is equal to roughly eight years of your salary. That should allow your family to payout all their debts, including the mortgage, and then live comfortably for a few years while they sort their financial situation.
3 - Ask about living benefits
Plenty of life insurance policies offer living benefits as well. You should ask about them before deciding which policy to buy, or you can read the fine print on the policy itself. Living benefits are conditions in which your policy may payout partially or in full while you are still alive. For example, if you are diagnosed with a terminal condition, you might receive your policy’s benefit in full.
That money will allow you to pay medical bills and make funeral arrangements, but it can also be used to enjoy your final days. How you’ll use the money is entirely up to you.
4 - Go for a reputable insurance provider
There are two things you need to worry about when selecting an insurance provider. The first is the stability of the company. Since life insurance policies are long-term commitments, if the insurance provider goes bankrupt in a few years, that could mean all sorts of headaches for you.
The second thing to consider is the quality of their customer service. Remember, if your family ever needs the help of the insurance provider, it’ll be in a moment of great emotional distress. Dealing with an unhelpful company is the last thing they need.
Look for reviews and testimonials of other customers before you decide which insurance provider to use. It’s also a good idea to use a price comparison tool like https://www.insurancehero.org.uk/ before you make your decision.