One crucial financial decision you can make is purchasing life insurance. One advantage of insurance is the financial protection that it offers when worst-case scenarios happen.
Many individuals subscribe to insurance policies in a hurry without understanding their needs. You can avoid making poor decisions when it comes to life insurance.
In the paragraphs that follow, we’ll list things to consider before buying life insurance in Nigeria.
10 Things to Look out for Before Buying Life Insurance
Your Needs
To determine how much insurance coverage you need, you need to ask to consider specific questions such as, how much of the family income you provide? Who are your dependants?
How long will your loved ones cope if the worst case were to happen to you? These questions will determine how much coverage you need, how long you need cover and what you can afford.
Compare Life Insurance Policies
There are majorly two basic types of life insurance:
First, term life insurance policies, which usually offer lower premiums and are within a 10-20-year term. Second, permanent life insurance, which provides coverage throughout an individual’s lifetime (provided premiums conditions are met).
Claims Record of the Insurer
Anyone who intends to buy any insurance should verify the claims settlement record of an insurer. Verify whether the insurer has a good claims payment ratio. Make inquiries to understand why claims are rejected.
Affordability of Life Insurance
Going through why you need coverage will let you know what kind of insurance plan you can afford. It’s essential to check if you’ll be able to pay for the premiums through the entire term. If you have larger insurance needs, you can opt for saving inclined protection plans.
Consult an insurance broker
An insurance broker will help you factor in your financial considerations along with your needs and dependent’s needs.
Age
The younger you are, the less high-priced your life insurance will be. The insurance industry is a calculated risk market. The older a person becomes the lower their life expectancy. Therefore, if you still have age on your side, you can benefit from the lower rates on life insurance for young people.
Health Status
In some cases, to get the best insurance rates, you’ll need a medically underwritten policy. This entails your insurer verifying your medical/health history. The better your health, the lower your insurance premiums will be.
Inflation
The impact of inflation can affect the future needs of your dependents. Therefore, you should factor in the effects of inflation before deciding the amount of cover you need.
Decide how you intend to pay Life Insurance premiums
They are different modes available to pay for these insurance premiums. Choose the method most preferable to you.
Inform your beneficiaries about your life policy
Some people hide the details of their life insurance policy from their beneficiaries for different reasons, some in a bid to surprise them. This can leave the benefits of a life insurance policy to go unclaimed. Immediately your insurance policy is issued, inform your beneficiaries about your insurer. Let them know where they can obtain documents and records that will be relevant in case they need to lay claims. Alternatively, inform your lawyer or a trusted associate.
Conclusion
An insurance plan will ensure your loved ones are financially protected and give you peace of mind. It is essential to know the basics of it to avoid making wrong decisions that may be costly later on.