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Common Questions Before Buying Insurance

Life insurance is a financial product that helps you protect your family from the financial loss of your death. The type of life insurance you buy depends on how much coverage you need and how long you want it to last. There are several types of life insurance policies available today, including whole-life and term policies.

How Much Coverage Do You Need?

If you’re not covered by any other life insurance policies, then it’s important to know how much coverage you need before deciding on a policy. The amount of coverage will depend on your age and financial situation, but if you have dependents or debts that need to be paid off after your death, then this may affect the amount of coverage needed. If there are no other financial obligations beyond what would cover funeral expenses (such as mortgage payments), then buying a whole life insurance policy may not be necessary at all—even though they can provide substantial peace of mind during retirement years when many people become unemployed or disabled due to illness or injury.

If you have dependents, then the amount of coverage needed will depend on how much financial support you want to provide them. If they are young children who would need to be placed in foster care if something happened to them, then your life insurance policy must cover this situation as well.

The Different Types of Life Insurance?

There are several types of life insurance policies that you can choose from. The most common ones are term, permanent and universal life insurance. There are also endowment policies, money-back policies, and cash value plans as well as unit-linked insurance plans (ULIPs).

The most common types of life insurance include:

  • Term Life Insurance- Provides coverage for a specific time such as 10 years or 20 years. The amount paid out depends on the age at which death occurs during this period; if it occurs before age 65 then there will be less money paid out while if it occurs after that age then there will be more money paid out after the maturity date (65 years old). The premium cost varies depending on how long you need coverage but lower rates are available if you purchase shorter-term policies such as 6 months instead of 1 year. There may also be discounts offered by certain companies/institutions so check before purchasing anything important like your home mortgage loan. 

How much does Life Insurance Cost?

Life insurance is usually a monthly payment. Premiums are determined by age, health, and other factors that affect risk for the policyholder. Premiums are usually paid monthly, quarterly, or annually. They can be based on your gender, job history, and other factors such as your home equity or family size.

What is Term vs. Permanent Life Insurance?

  • Term life insurance is temporary, and you can cancel it at any time. 
  • Permanent life insurance is for life and cannot be canceled. 

Term life insurance is cheaper than permanent life insurance because the company only pays out when you die or get injured in an accident; as long as you don’t make too many claims on your policy, there’s no need for them to keep paying out each month.

Essential Questions to ask Before you buy Life Insurance

There are many important questions you should ask before buying life insurance. Here are the essential ones:

  • What kinds of life insurance policies are available?
  • How much does the policy cost?
  • What is the term vs. permanent portion of my policy?
  • What do I need to do to get a quote or apply for a policy and how long will it take me?

Questions to Ask Before Choosing a Life Insurance Plan

  • Do you need Life Insurance if I have no Dependents?

    If you have no dependents, the chances are that you don’t need life insurance. You can use your savings to provide for your family. You can leave money in your will or trust your loved ones. Or, if you prefer not to do this but still want some sort of guarantee for their future financial security, consider setting up a college fund for them—this way they’ll always have access to money set aside specifically for their education needs.
  • My Employer provides Life Insurance already. Do I need more?

    If you are a salaried employee and your employer provides life insurance, you may not need to buy additional coverage. However, if you are self-employed or freelance and do not have an employer plan in place, it is important to check whether or not there is any provision for life insurance coverage in place. If the company has a policy but does not allow personal contributions towards this specific benefit (which can be done through payroll deduction), then they will likely be unable to reimburse their employees’ claims when they do need them.
  • How much is enough?

    The first question to ask is how much coverage you need. If your life expectancy is less than 10 years and you don’t have children or other dependents who will require financial support after your death, then a term life insurance policy may be all that’s needed for now. Term policies are generally less expensive than whole-life policies because they don’t provide as much coverage for their higher premiums. If it’s more likely that your family members will survive longer than 10 years after your death, then a whole life insurance policy could be just what the doctor ordered. Whole-life policies are designed specifically for people with longer lifespans who want to make sure they’re covered no matter what happens in the future.
  • At what age should I Buy Life Insurance?

    The younger you buy, the cheaper it is. This is one of the most important factors to consider when you’re looking at life insurance policies. If your parent or spouse dies before they reach retirement age, they may not have time to qualify for coverage and pay off their debt in full (or close enough). They could also leave behind a lot of debt that would need to be paid off by someone else after death—which could end up costing more than just paying for their funeral expenses. On the other hand, if you wait until later in life then chances are that even though there might be some financial loss due to declining health from illness or injury then there will also be more years left under your belt so therefore hopefully longer payments over time too which means less costly premiums overall.
  • What is the Term Plan?

    A term plan is a type of life insurance policy that has an expiration date. A policy with a term policy can be reviewed every year or two and renewed as needed. The renewal process can include any changes in your financial situation, such as an increase in income or net worth or loss of employment. With a term plan, you may have to pay premiums for up to 10 years after purchase before your maturity date (the time when you stop paying premiums). You’ll usually receive payments according to how much coverage you originally purchased—for example, if all of your premiums are paid up until maturity, then your payout will be based on the amount remaining at that time instead of what it was during the initial purchasing stages.
  • How are the Death Benefits Provided?

    The death benefit is the amount that the insurance company will pay out to your family. This can be paid in one lump sum or installments over a while.
  • Would I get any Maturity Benefits?

    If a life insurance policy is issued to you, it will mature after 10, 20, or 30 years. This is the time when your payout amount becomes available. The maturity benefit is the amount of money that you would get if you surrender your policy before it matures. The maturity date can be different for each company and varies from company to company. It’s also known as “surrender value” or “maturity value.”
  • Can I buy a Life Insurance Corporation (LIC) Policy if I am an NRI?

    As an NRI, you can buy a LIC policy as long as you have an NRE/NRO account in India. You will get a certificate of deposit (CD) in India and the policy issued in India.
  • What if I Can’t Pay the Premium?

    If you can’t pay the premium, you should consider paying by installment. This is a common option for most people and will help you keep your premium low until you have the money to pay it off completely. If this is not an option for you, or if your circumstances change (for example, losing a job or becoming unemployed), then you may be able to request a waiver from your insurance company. A waiver means that they will lower their standard rate based on what they know about your financial situation at the time when they issue their policy; however, if any other factors make it difficult for them to issue such a policy (for example high age), then it may still be possible but at higher rates than usual due to additional risk involved in giving out such waivers without knowing exactly how things work out in real life situations over time.
  • Do I need a Medical Exam?

    To qualify for life insurance, you must have a physical exam. The medical exam can be done by your local doctor or at a hospital. You may also want to consider getting an annual health checkup from an insurance company or clinic.

In the case of one’s death, life insurance protects your family financially. Since you can buy it whenever you want, it works best if you have a lot of time until retirement. Make sure you are aware of the different kinds of life insurance policies that are offered. You might also want to consider other aspects including how reasonable the premiums are and, if applicable, what benefits each plan offers. When it comes time to select your insurance, think about going with a provider that has been in business for some time or is at the very least highly rated by clients because life occurs.