Questions Asked While Buying Life Insurance Policy

July 21, 2021

Taking up life insurance can seem scary or intimidating at first, but with proper guidance, one has nothing to worry about. Once you make the decision of buying life insurance policy, selecting the right company and plan can seem tricky. Here are some of the questions that will help you to get more clarity on buying life insurance policy.

Know about Insurance Company

This is the most basic aspect that one needs to consider before jumping into questions regarding their insurance. Find out about the insurance company you are buying insurance from. You must explore aspects such as their history and about how long have they been successfully running.  Find out how many agents work for them and most importantly, their reputation for latest claim settlement ratio. Before you put your money into it, be sure about its reputation and value.

Amount of Insurance Coverage

After doing thorough research on the company that you want to put your money into, the second question arises. You need to assess the amount of money you will be investing in the plan. There are a number of factors that are taken into consideration during this, such as your age, future financial needs, inflation, etc.  After having decided this, you must decide on the types of life insurance you want to buy.

Survival Benefits Offered by the Company

Apart from the basics, the premiums, and the death benefit, you should also find out about the survival benefits. Some insurance plans offer no survival benefits, while some offer survival benefits as maturity benefit. It is necessary to find out if the insurance policy desired by you provides you with survival benefits or not.

Effect of Inflation on Insurance Policy

Insurance is generally cashed out after a very long period as to when it was bought. If you buy insurance when you are 30, it’ll probably be cashed out after another 30-40 years given that untimely death doesn’t take place. Within this 30-40 yeas, inflation is bound to happen. Thus you need to find out if your policy is adjusted as per the economic inflation rates. It might so happen that the sum assured today seems huge while decades down the line it may not be enough for the purpose of taking care of an entire household, even if you never miss a payment. Some companies automatically adjust to the rates of inflation while others offer it as an additional rider.

Best Time to Purchase Insurance

Usually, the younger you are the better. This is because as you age, the health risks increase leading to you being a risky investment for the company. Purchasing life insurance when you are younger is a much better option because it provides you with better plans and lower premiums.

Benefits Received

Policy benefits may vary from policy to policy. It is best to do your research before you select your policy. Be sure if the benefits received are worth the premiums and the sum assured. Also find out about the consequences if you submit late premiums or in case of premature withdrawal. Find out about the overdue premium payments before you purchase the insurance. It is a very important aspect.

Effect on the Policy during Certain Scenarios

It is important for you to find out if there will be any change in your insurance or premiums if you take up habits that can shorten your life span like smoking or drinking. Also, in case of migration of the policyholder, will it result in any change in policy? Usually, companies provide cover even if the insured is not in the country as long as they are informed about this. Some companies don’t provide cover when the policyholder shifts to an unstable and unsafe country. It is also very important to find out what kinds of deaths are covered by the policy. Usually, the policy does not cover deaths that occurred because of natural calamities and terrorist activities. Make sure you properly find out what your insurance covers and what it does not.

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