Tips on
Purchasing Life Insurance
In terms of personal pleasure,
buying life insurance is not in the same category as
getting a new car or a spring wardrobe. It is a lot more
complex and infinitely more important. The primary
reason individuals purchase life insurance is to protect
the financial security of their loved ones. It makes
good sense then to use the same care in buying life
insurance as you would when making any significant
purchase. And whether you are looking for a new home or
a state-of-the-art stereo system, shopping around for
the product that best meets your needs is of utmost
importance. Life insurance is no exception.
Before you begin your search for a
life insurance policy, it is important to do some
preparation. To help you determine the amount of
insurance you need, you should identify your dependents
(this may include children, parents, spouse), your
financial obligations and resources. This way, in the
event of your death, your family will have the financial
resources it needs to continue to run a household. A
company representative or agent can help you find the
right type and amount of insurance for your family's
needs at an affordable price.
In addition, here are 10 things
you should do to help you and your family make the most
appropriate life insurance purchase:
1. Make sure your agent and
company are licensed to do business in your state. Call
your state insurance department if you are not sure.
2. Take your time. On the other
hand, do not put off an important decision that protects
your family. Make sure you understand fully any policy
you are considering and that you are comfortable with
the company, agent and product. Do not rush into a
decision just because you are feeling pressured.
3. Ask your agent if the company
offers any "healthy lifestyle" discounts on your policy.
For example, non-smokers can save from 10% to 20% on
their premiums.
4. Do not omit any part of your
medical history on your life insurance application. If
you do, the company may be able to refuse coverage, deny
a claim or cancel the policy.
5. Read the insurance contract
carefully and, if necessary, ask your agent for a
point-by-point explanation of the language. Insurance
policies are legal documents and you should be familiar
with what they promise, even though some technical terms
are used.
6. Expect delivery of your life
insurance policy within approximately three months. If
it does not arrive, contact the company for a written
explanation.
7. Remember that you have a 10-day
"free-look" period that entitles you to change your mind
about purchasing the policy. If you do so, the company
will return your premium, without penalty.
8. Write the check for your
insurance premium to the company, not the agent. Be sure
you are given a receipt. Pay premiums annually or
semiannually, rather than monthly or quarterly, if
possible. That way, the company saves money by billing
you less frequently, and the savings are passed on to
you.
9. Inform your beneficiaries about
the kind, amount and location of any life insurance
policies you own. Keep your policy in a safe place at
home and, in addition, keep your insurance company's
name and your policy number in a safe deposit box.
10. Review your life insurance
coverage at least once every two years to be sure it
meets your current needs. Be cautious if another agent
or company contacts you and wants you to cancel your
current policy to buy a new one. Contact your original
agent or company before making any decisions.
All things considered, when you
are purchasing life insurance, shop carefully, ask
questions, and make sure you understand the answers. You
would do the same with any other product or service that
you buy.
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