After all there are plenty of different policies to choose from, all seeming to cater to different needs and circumstances, so it’s no surprise some people are left scratching their heads when it comes to deciding on suitable coverage.
However, choosing the right policy doesn’t have to be difficult, or in fact confusing. What is needed is a little help from a friend. Below are three simple tips that could help you pick out and choose the right life insurance policy for you and your family. Note: for the purposes of clarity and understanding, this article imparts advice based on life insurance policies only. It is therefore important not to imply that the tips given apply to mortgage life insurance, critical illness coverage or even over 50s coverage, which offers funeral plans, for example.
1. Life insurance: should you break the ice?What first-time buyers should realise is that life insurance could act as an important financial safety-net. If others depend on your income for support, life insurance coverage will ensure your loved ones are financially secured in the event of your death. It’s therefore vitally important you do your homework. Many insurers often segregate their products in order to cater to specific customer needs; although this provides a wider selection of policies to choose from, it can become confusing for first-time policy buyers.
2. Forget mental maths, use a calculatorThe amount of money your family or heirs will receive from insurers after your death is commonly known as a death benefit (sounds a little oxymoronic doesn’t it?). Many insurers have quick online policy calculators, which can help you better understand the amount of coverage (or death benefit) available to you. Such tools provide calculations based on personal and financial circumstance, i.e income, health issues, etc, so it’s mindful to remain truthful in order to attain the most accurate results. Nevertheless, even if you’re simply using the calculator to educate yourself on the workings of life insurance, such tools can help you feel more comfortable when discussing your needs and policy options later on.
3. Take out separate policiesIf you’re married, planning on getting married, or in a serious long-term relationship, you might be considering taking out a joint life insurance policy. All well and good, however joint life insurance is commonly available as a joint life ‘first death’ insurance plan, which means that the insurer will only pay out for the first death in the partnership; leaving the other surviving partner without coverage.
So, depending on the current insurance policies available in the market, it’s often more logical to opt for two single life insurance policies instead. This will obviously eradicate the ‘first-death’ rule, often associated with joint life insurance, and cover the second death in the partnership as well.
In addition, individual life insurance policies can be customised to suit the lifestyle of each person. However this flexibility cannot be reciprocated by having a joint account, since the plan covers both individuals in the policy.
Currently experts in the industry are calling for a revamp of joint policy accounts in order to stem the tide of customers currently taking out single life insurance coverage instead.