10 tips for before taking out life insurance.
Life insurance is a contract between an insurer and a policy owner. A life insurance policy guarantees the insurer pays a sum of money to named beneficiaries when the insured dies in exchange for the premiums paid by the policyholder during their lifetime.
Having life insurance is always a good decision to protect other people in the event of the insured's death and also to protect himself if he becomes disabled. But before taking out life insurance, you have to take into account some recommendations and 10 tips for before taking out life insurance.
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1. Do it early taking out life insurance.
It is the first advice to take out life insurance. Keep in mind that life insurance becomes quite expensive over the years, logically, so it is better to do it when you are young. The latest INESE statistics say that 30% of people have life insurance, and that between 35 and 54 years is the age range in which it is most contracted. The appropriate thing would be to sign life insurance whenever the disappearance of a person supposes an economic problem for those who depend on him; that is, when you want to guarantee the future of the children, their studies, the family home, the survival of the couple... Normally, when the children are young, there are dependents or a mortgage to pay, life insurance is more necessary.
2. Hire disability when taking out life insurance.
Well understood life insurance should start with oneself. The idea is to guarantee the economic situation of the beneficiaries, but it should also serve to insure the policyholder in the event of a total and permanent disability that prevents him from working, in which case he would not only be unable to help his family, but not even pay his own livelihood. This guarantee is optional in life insurance, but it should be contracted, along with others such as dependency, in the event that the policyholder cannot fend for himself, or serious illnesses, such as cancer, heart attack, stroke, etc.
3. Read (and understand) the conditions before taking out life insurance.
It is true that it is not exciting to read a condition, but it is very important to know the exclusions and coverage of life insurance to avoid surprises. The policyholder may believe that he is covering the needs of his heirs, and yet compensation is excluded if his death occurs under certain circumstances. Sometimes the conditions of the policy are cumbersome or incomprehensible, but the consumer should know what he is contracting; so don't be shy about asking for all kinds of explanations before taking out life insurance.
4. Name beneficiaries.
If the policyholder does not designate a beneficiary or beneficiaries in his life insurance, they will be the heirs. But, even if you want it that way, it is always better to enter them in the policy with their names and surnames because this way you save paperwork. When the beneficiaries are not specifically designated as such, it is necessary to present a designation of heirs made before a notary public, an authorized copy of the will, previously settle the inheritance tax... On the contrary, if they are explicitly named, the company will pay what has been agreed to those who are identified as beneficiaries. Another advantage of naming beneficiaries is that the same or different percentages can also be established for each one.
5. Compare prices when taking out life insurance.
Do not believe that all companies have the same prices: the offers are very varied and change throughout the year. In addition, policies can be contracted almost tailored to the interests of each one, with which it is possible to adjust the amounts to the needs. In our price comparison it is possible to see the enormous differences that exist between some companies and others, although it is also important to pay attention to the coverage.
6. Compare coverage during taking out life insurance.
It is not enough to set a certain capital and forget about it. The policies sometimes have unusual coverage that can be very interesting, such as extraordinary remuneration to pay for the children's studies, the mortgage, the expenses associated with death, credit card debts or double the capital for the children in the case of both spouses die, for example.
7. Establish sufficient capital taking out life insurance.
Life insurance costs more depending on the capital that is contracted; that is, the more the policyholder wants his beneficiaries to charge if something happens to him, the more it will cost him. This capital must be established for an amount that covers the needs, but without the policy skyrocketing in price. It is recommended that the guaranteed capital be at least five times the gross annual salary of the insured. This is so because it is estimated that in a family with a serious and sudden loss of income contributed by one of the members, it takes at least five years for the family economy to recover. But this is only approximate; Before contracting life insurance, each case must be considered: if there is a mortgage, debts, dependents...
8. Personalize life insurance.
Life insurance does not have to be standardized. Many companies already offer policies tailored to each client, and not only in capital, but also in coverage. The life insurance policyholder can contract everything they need, exclude what they do not want or have several insurances with different companies.
9. Do not lie when taking out life insurance.
Insurance companies ask those who wish to take out life insurance to fill out and sign a health questionnaire, and sometimes even require a medical examination. There is no need to lie or hide illnesses or unhealthy lifestyle habits, because, in the event of fatality, the insurer could refuse to compensate if it can prove that there has been deception.
10. Ask for help.
Hiring life insurance is easy and cheap, and can be done online, but it is best to seek advice from an expert insurance broker who works with all companies and advises what is best in each case, what are the essential coverages , which are expendable, which capital is more suitable for each economy and where are the best prices. And another thing, there is no need to continue year after year with the same insurance or with the same company. Life is changing, and needs too. Signing life insurance and forgetting to pay without looking at the receipt, even if it is low, is a mistake. It is advisable to adapt the capital and coverage to the needs of the moment. Whenever there are significant changes in life that affect the economic, family and personal spheres, it is advisable to adjust the policy, more or less. And also stay tuned for new offers. If you want advice, call us. It's free.
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