|Insurance Buying Tips #1: Shop smart|
|When looking for insurance, your No. 1 priority should be to find adequate coverage. Price is important, but you’ll want to determine what kind of coverage you need first. Then you can fit that coverage into your budget and determine which carrier can provide you with the most comprehensive policy for your situation. You may be tempted to choose insurance with the lowest price tag, but if you don’t have enough coverage (or the right kind of coverage), you will see less financial benefit when it comes time to file a claim.|
|Insurance Buying Tips #2: Look for discounts|
|Once you evaluate your coverage needs, factor in your budget and find ways to save. Ask your insurance agent if there are any discounts on your coverage. Often, carriers offer discounts for things like paying your policy in full, staying auto accident-free or, if you’re in school, getting good grades. You also can save money by “bundling” multiple policies, such as purchasing a home and auto policy from the same carrier.|
|Insurance Buying Tips #3: Fill in the gaps|
|An average policy will cover the basics, but you may need to add extra coverage to meet your unique needs. For instance, you may have items like electronics or a nice piece of jewelry that would be financially difficult to replace, even with the assistance of your average renters or homeowners policy. You may want to add additional coverage for these items.|
Term insurance is a favorite among many of us. The reason is also simple enough to understand. One, the plan acts as a tool of income replacement by creating an emergency fund. Two, it gives financial security to our family. The third and the best reason of all is that it is very cheap compared to the level of protection offered. You need to pay a very small amount to buy a considerable amount of cover which gives financial stability against premature death. Aren't these reasons enough to make term the most favored life insurance products?
They are and that is why most of us always invest in a term at the earliest. Are you too looking to buy a term insurance for yourself? Yes? Great! You should be patted on the back for a very good decision but not so soon. There are some points which you should consider when buying a term plan. Here is a list of such points:
- The coverage
The very essence of term policy is to provide your family financial security in case of your premature death. This security is possible only if you opt for an optimal level of Sum Assured. Don't be stingy when buying it. The premium is already low. So, avail a cover as per your requirements. There are various techniques to find the right amount of cover for you like Human Life Value method, Income Replacement method, etc. Use these methods to ascertain the cover you require and then ensure to buy the correct coverage.
- The term
It pay a benefit only in case of death at the time of plan tenure (except in case of return of premium plans). As such, you should, ideally, buy a plan with the longest possible tenure. Usually, the term policies available in the market today offer tenures up to 30 or 35 years. So, choose the highest tenure to enjoy coverage over a larger period.
- The type of plan
Term plans come in five variants which are as follows:
o Term Insurance Plan – this is a basic term plan which runs for a specified period of time. On death during the plan tenure, the Sum Assured is paid and the plan terminates.
|Insurance Buying Tips #4: Purchase life insurance—you aren’t too young|
|Life insurance is essential, no matter how young or old you are. And for millennials, buying now may be a smart move because it’s cheaper to buy a life insurance policy when you’re young and healthy. This kind of insurance can help your family cover unexpected costs in your absence, including student loan debt or a mortgage, in addition to end-of-life costs. And if you have kids, a life insurance policy can also support their education or childcare expenses. Additionally, every millennial should consider long-term disability coverage, which helps you stay afloat financially if an accident happens and you become disabled and unable to work.|
|Insurance Buying Tips #5: Talk to an independent agent|
|An independent insurance agent is an essential resource when purchasing insurance—especially if this is your first time. An independent agent works with multiple different carriers, which is different from captive agents who can only sell insurance from the carrier they work for. Working with an independent agent can help make sure that you are getting the best coverage, for the best price. You’ll also benefit from independent agents’ insurance knowledge; they know how to talk you through your options and actually explain what each policy includes. An independent agent will make sure all of your assets are covered, help you find discounts or other ways to save, and be a valuable resource as your life changes and your insurance needs change, too.|
|Insurance Buying Tips #6: Only buy insurance to maintain your existing standard of living|
|You don’t need insurance for events that won’t severely strain your finances. Start with your basic needs (home, auto, business), then work your way to include other needs (cyber, liability). You can always obtain coverage later for something if you change your mind. You can minimize your risk and maximize your savings by buying insurance that won’t cause you to break the bank.|
o Increasing term insurance – under these plans, the amount of coverage increases every year by a specified pre-determined percentage. On death, the enhanced Sum Assured in the year of death is paid.
o Decreasing term insurance – opposite of increasing term plans are decreasing term insurance policies . Under these plans the Sum Assured reduces by a specified percentage or amount. These plans usually come as mortgage redemption plans and the decreasing value of coverage represents the outstanding loan. On passing away during the plan tenure, the decreased Sum Assured in the year of death is paid which is used to pay off the outstanding loan amount.
o Return of premium plans – unlike other term policy which have no maturity benefits, return of premium plans return all your premiums paid if the policy matures.
o Monthly income plans – these plans are similar to basic term where the only difference is in the payment of plan benefits. On death during possession, the Sum Assured is paid in monthly instalments rather than in one lump sum.
You should understand your requirement and then buy the best variant of it.
- The purchase channel
These plans are sold both online and offline. Online plans are becoming more popular nowadays because the premiums are lower. Online plans are sold directly by the insurance company as compared to offline ones which are sold by agents or brokers. As middlemen are eliminated in the online channel, the premium comes down. So, go online, compare the different plans available and then buy the best term policy for yourself.
- The premium
After having considered all the above points, look at the premium. The premium rates vary across different insurers depending on their pricing policies. Though the plan might be same, the premiums might vary. So, search for a it online and compare their premiums against the coverage granted before you buy.
Buying a term plan is not difficult once you know what points should be considered before you buy the plan. So, know the points and then buy the best one.
|Insurance Buying Tips #7: Ask your insurance provider what the policy doesn’t cover|
|Every insurance policy has perils that are not covered by your policy. These perils are referred to as “exclusions”, and every policy has them. Ask your insurance provider to explain the exclusions in your policy to avoid discovering what they are once you incur damages or a loss.|
|Insurance Buying Tips #8: Consider bundling several policies with one insurance carrier|
|here may be value in bundling several policies with one insurance carrier. If you’re looking to insure multiple vehicles or obtain multiple types of business coverage (e.g., liability, property, cyber), then you may want to consider obtaining coverages under one insurance provider who carries multiple products, and who may be able to offer you multi-policy discounts or loyalty programs.|
|Insurance Buying Tips #9: Review your insurance needs on a yearly basis|
|As your needs evolve, so will your insurance policy. Maybe you’ve acquired a new vehicle since obtaining auto insurance for your primary vehicle, or started operating your business out of your home, or experienced a cyber-attack during the year… Whatever the change(s), you’ll want to make sure you’re covered for any new risk exposures. Talk to your insurance provider to stay on top of your insurance needs.|