Hitting your early 30s and thinking it’s time to start planning your financial future? Let us guess, you are being given unsolicited advice left, right and centre and now you are confused on where to begin?
Do not worry, we all have been in the same boat as you and have felt as we are drowning. The good news is we are here to offer you a life jacket filled with tips and ideas on how to kickstart your fiscal planning. One vital element of any effective financial strategy is to select an optimal life insurance policy that will aid your family in your absence.
Essentially, a life insurance policy is a written agreement you will hold with an insurance service provider whom you will pay monthly premium instalments. When the policy holder has passed on, the insurance company will dish out a lump-sum amount to the designated beneficiary. It will help lift your beloved ones’ economic status and save them the hassle of facing any possible fiscal troubles. When choosing a life insurance policy, there are several factors to take into account.
Since there is a plethora of information out there, the process of life insurance selection can get confusing and complicated. That is why we reached out to these life insurance lawyers in Houston to share a few clarifications and to make the whole procedure a little bit easier.
Don’t Get Lost
The variety of life insurance products available may appear overwhelming. Remember that you do not want to get lost in the marketing or technical jargon thrown at you and you want to truly comprehend the intricacies of the policies you are considering. It will be easy to confuse one kind of insurance policy for the other but remember that true life insurance portfolios differ from others in the category. For instance, mortgage term insurance compensates your property debt and is not meant to leave any additional income for your family.
Know Your Needs
As stated, there is a whole world out there of insurance brands. It is imperative that you conduct an internal analysis to identify your needs and verify what your requirements are. Once armed with this knowledge, selecting an insurance product will become a clearer and rapid process. For instance, you could go with level term insurance as it is simple and direct in its approach. It pays out a certain amount given that you pass away in the time period assigned to your contract.
Hey, it’s the age of the internet where all kinds of information are available and it is not really possible to hide any facts. Hence, be honest and don’t worry if you slipped your hand in the cookie jar. What we mean is that if you had any kind of illness before or any form of surgery, make sure you disclose it to the insurance salesman. Be an open book about your medical history. Sure, you may be delegated a slightly higher monthly premium but you will not endanger your future payment (upon expiration) as you were transparent from the beginning.
Yes, we all love our spouses but we do not mean to be single in that aspect (We are invested in the idea of happy families!). When you are buying an insurance policy, avoid taking out a joint one. This option may lure you in as it is a cost effective one compared to paying two separate monthly premiums. However, the policy will be terminated once the first person passes away. This implies that your partner will have to procure another one and start from scratch. If she or he is older at that stage, the life insurance premium will be quite expensive.
Know Your Coverage
A general rule to follow is to request the financial cover to be approximately ten times your yearly income. Usually, this is applicable up to the time your children have completed their education, whether college or high school. If the former, you may contemplate a higher volume of coverage. Have a think and consider what kind of debts or expenses you may have, and then quote a figure.
If your wallet is dearer to you than that pack of cigarettes, then you may want to give it up. Think of it as a double whammy: you save a few extra pounds by not buying cigarettes and you pay a lower premium on your insurance policy. If you consume any form of tobacco, your monthly payments will be much higher compared to those who do not use tobacco. So, go nicotine free for a year and enjoy not only healthier lungs but also lower expenses.
Yes, policies that may appear “cheaper” to you have the potential to be as effective as their costlier counterparts. Life insurance is actually pretty straightforward: it’s a policy that will dish out money upon one’s expiration. You do not need multiple add-ons and can focus on getting the amount you require in the future.
If you are one of the many people who chose to live life right by eating healthy and working out regularly, then chances are your monthly premiums are much lower. It differs from case to case and person to person, but the healthier you are, the cheaper your premium will be. A 40 year old insurance policy taken out at the age of 35 will be easier to obtain than a similar product at the age of 55. Regardless, you may want to swap those daily French fries for a baked version. You never know when you may want to choose your insurance policy and being prepared in advance will help you go a long way.
Choose Fixed Prices
Reviewable or guaranteed premium? The latter means you dish out the same amount every month in all circumstances for the duration of the policy. If you opt for the reviewable alternative, then the amount you pay on a monthly basis can be revisited at the discretion of your insurance service provider.