How to take a life insurance policy
Life insurance is an essential part of our life which is used as part of a financial plan to transfer assets on to the next generation. To take out life insurance on a third party, you must have an insurable interest in the person’s life and the permission of the individual on whom you wish to take out a policy. Taking life insurance policy could cause you and your family with financial need.
Insurance companies are very careful and restrictive about allowing you to purchase life insurance on people other than yourself and your spouse. Since family is the most important factor in one?s life which makes him think twice before taking any decision so getting an Insurance policy will be very effective for life.
Life insurance is a policy cover in which you are required to pay certain amount as premium. This amount keeps on accumulating and is given to your family after your death.
1. Before taking life insurance policy first you have to determine the type of insurance you want either term or permanent policy.
Term insurance policy is easier to get since it does not require a medical examination. Whereas permanent insurance, require a medical examination and is good for the person’s life as long as premiums are paid.
2. The insurance agents will have access to many more products than just one firm can provide so they give best policy according to your family needs. Make sure the insurance policy fits your needs and budget, and make sure you understand the contract. The agent is required to explain about the policy to you so don?t sign until you understand the contract. You have 30 days to look at the policy and understand it. If you are not satisfied with it during that time, cancel the policy and you will get your premium back.
3. Be free to ask the your agent questions related to life insurance that you are taking. You should know about the insurance policy before buying it. Is the policy renewable and non-cancelable? How long are premiums guaranteed for? Is there an accidental death rider? What are the exclusions?
4. It is best advised to talk to your insurance agent to learn about the amounts available with the specific plans you are considering. Policy holders should be aware that premature surrender of the policy can result in a loss of principal.
5. Most of the Life insurance premiums will be lower if you start young and are healthy, so it is better to take up a policy as early as possible after you start earning. The younger you can buy life insurance, the better. As you get older, you can face a higher risk of health issues. If this happens, your rate will be far higher, whereas certain life insurance policies have a guaranteed premium for a certain number of years.
6. The life insurance market is very large, so do research on policies to find the best deal. You need to find out what cancellation options are available to you when you are setting up your life insurance policy. Some companies charge an early termination fee, or there may be other stipulations.
7. When you buy a life insurance policy, you buy it at the rates that are based on the day you purchase it. If you bought a policy even five years ago, the mortality tables may have changed a little so maybe that death benefit cost is a little more expensive. If you bought a policy within the last couple of years do the math to see if it you should change it. So you should review the rates very often.
8. Check out before you take up a policy whether it has a provision of loan. The permanent life insurance policy acts as a form of savings with which you can borrow money against the premium amount that you pay. You can make use of your policy as a form of cash in case you require money to meet any emergency need.
9. While taking a policy you need to fill out the application with all of the relevant information that includes full/legal name, date of birth, residential address, and health information. Send in the application with the initial premium payment and wait for approval. Then review the policy contract and maintain a copy of the policy in a secure place such as a safe deposit box. You may want to give the insured a copy of the policy as well.
10. To take complete benefits of life insurance policy you have to maintain premium payments as required by the insurance policy. Benefits can be denied if premium payments are default.
To get more information about taking life insurance policy it is always advised to talk to your? insurance advisor or agent to take the right decision.