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Why Do You Need a Life Insurance Policy and How to Choose One

Updated on May 1, 2014

Why Do You Need a Life Insurance Policy

Taking out a life insurance cover is an important part of good financial planning. It is important to buy adequate life insurance cover to make sure that you and your family is protected while you are living and when you no longer exist among them.

A good life insurance policy can help you earn an income replacement. It can provide options for debt repayments and other benefits for your family. Today, most people, particularly from the financially developed countries, have life insurance policies to secure themselves and their loved ones in the event of any unexpected incident in the future.

Most life insurance companies can help people find plans tailored to suit needs of each individual based on their specific circumstances. Today, taking out life insurance policy has become a necessity for most people to protect their family or their dependents securely once they are gone. Life insurance policy acts as a form of protection when it comes to financial future of your family in the event of any unexpected incidents in life.

A common misconception that many people have is that life insurance is meant only to protect their families after they die. They do not know that life insurance is in fact a very useful financial tool too to fund their financial needs in the long run. You can use some insurance policies as a form of savings. Some insurance policies provide liquidity of cash flow to help you solve any financial needs as and when arise.

Tips on How to Choose the Best Life Insurance Policy

  • The best time for you to apply for a life insurance policy is while you are young and healthy. You will qualify for the best rates when you are young and in good health.
  • If you do not have a cover already the best time to get your life insurance policy is now. You may not qualify for the best rates or an affordable life insurance plan later if you are waiting for tomorrow. In fact, you may not even qualify for life insurance at all if you are playing a waiting game.
  • You may buy a policy that requires you to may pay higher rates initially, but you can always request your policy provider for a rate reclassification later.
  • You may have to pay higher premiums initially due to the state of your health, but you can request for lower premiums by asking your policy provider to re-evaluate your circumstances. Your health issues may improve if you give up smoking or lose some extra pounds. You can ask for lower premiums when this happens.
  • To find and choose the best deals talk to different insurance companies. You might need a medical exam to get the best deal, depending on where you live in. You may also need to make an appointment for a medical exam with your chosen insurance company.
  • Smoking increases your life insurance premiums significantly. Smokers are likely to pay 2 to 4 times the amounts that non-smokers pay for a life insurance plan. So, if you have a life insurance medical exam then simply just quit smoking in order to avoid paying for higher premiums.

Bottom Lines

Buy enough life insurance cover that will see your family through after you are gone. You can use a life insurance calculator to help you pinpoint the right amount. If you buy inadequate insurance then that may not cover all the debts you may have, expenses of your children’s education, health, and other expenses. Choose and purchase the right life insurance policy depending on your needs and your current financial circumstances as soon as you can and secure your family’s financial future.


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