Life insurance can seem a lot more simple that it actually is. The fact is that you need to be considering a lot of factors when you choose a life insurance policy. Understand that this article isn’t aimed at putting you off looking into life insurance. Depending on your situation, life insurance may indeed be vital. Your savings need to be protected, after all. But you need to consider these 5 factors when you’re shopping around.
1. It’s not just about covering people after your death
A lot of people think that life insurance is all about death. Well, it’s mostly about death, but there are also “living benefits” that come with many policies. And it’s these that you should really be on the lookout for. There are many policies out there that can help you financially if you become terminally ill or chronically ill.
2. There are two main types of policy
There’s life insurance and then there’s whole life insurance. Which seems odd, I’ll admit. Doesn’t the word life necessarily mean whole life, after all? Well, once you get over the semantics, you’ll see a clear difference between the two.
3. Naming a minor as the beneficiary might not be a great idea
Loads of people get life insurance to ensure that their money is passed onto their children. But that doesn’t mean you should name a minor as the beneficiary. If you die before they turn 18, then the insurance company will keep that money then give it to them when they do turn 18. This may sound like a decent setup. But there will be absolutely no conditions as to what that 18-year-old can do with the money. And how many 18-year-olds make wise financial decisions when given tens of thousands of dollars?
4. Your will may affect it in ways you don’t realize (and vice versa)
Having both a will and a life insurance policy is a pretty good idea. But you will need to consider one when dealing with the other. Most of the time, the two won’t interfere with each other. Life insurance usually don’t have to be included on a will because it’s not an asset that goes through probate. But if assets aren’t going directly to a single beneficiary, then certain things may need to be cleared up. (For example, if an estate will be a beneficiary.)
5. It’s going to get more and more expensive
Grim but unavoidable fact: the older you are, the closer you are to death. And the more likely it is that you’re going to die on them, the more an insurance company is going to want to charge you. So take care when shopping around for a good quote. You may leave it a while to see if prices drop over time. Or you may be dragging out particular negotiations because you want to make better deals out of the particular policies being offered to you. But life insurance will only get more expensive as time passes. So be careful about procrastinating!