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8 Things to Consider Before Buying Life Insurance

8 Things to Consider Before Buying Life Insurance

What Are the 8 Things to Consider Before Buying Life Insurance?

You keep asking yourself several questions when it comes to life insurance. Right?

Have you ever been approached by insurance sales agents?

Were you convinced? Maybe you were not!

But because…

You are preparing yourself for the unseen incidences and losses, you think of looking for an insurance cover. The next question is, 

How will you choose the best insurance coverage in the market?

Life is so unpredictable, and no one has the power to tell what will happen in the next hour, tomorrow or even next year.

The intensity of uncertainty triggers many questions in everyone’s mind.

What will happen when you are not together with your family or who will complete your financial responsibilities?

You may also be forced to provide financial security to your dependent family members. 

Life insurance is the only best solution to make your family financially secure in the future. If you do not worry about your family’s future, then you can enjoy a stress-free life.

But before settling for an insurance cover, you need to know some facts related to that particular cover. The effects will guide you at different stages of an insurance policy.

Below is the list of things to consider before buying life insurance cover in Kenya. Check the details:

Read also: How Can You Protect Your Career?

#1. Life Insurance is a tool for risk coverage, not an investment

People get frustrated after failing to understand the difference between an insurance cover and an investment. Before you go for an insurance cover, do your research on your needs and expectations.

Again you should know one crucial finance lesson. Learn to keep insurance and investments separated to avoid frustrations that have affected others before.

Don’t go for an insurance policy that will demand you to pay an enormous premium more than what you can afford. Buy insurance policy that will fulfill your insurance requirements to complete your expectation.

#2. How much coverage you need

How much do you estimate will be enough to pay your family’s bills? It is a question that several people find hard to answer. Different people have different methods of calculating coverage. 

The most suitable method is to multiply your present income by a number say 20 or 15, and the result will be your coverage figure. But remember to make a comprehensive calculation to finalize the coverage amount.

Consider your future dreams like buying a home, children’s education, wedding expenses, and medical insurance expenses. After the whole calculation, then you can now subtract your current asset.

Your figures based on the current prices, so you need to think of inflation. The prices may rise with the increment in the inflation rate.

#3. Tell everything during your application

Every insurance companies conduct their activities based on their principles and policies. People complain about insurance companies not fulfilling their promise over the faults they created by themselves. 

They give wrong credentials during their application, but they end up exposed when one is claiming for payment.

The person insured must willingly disclose to the insurer complete information about them regarding the subject matter of the policy.

#4. Choose affordable premium

You will have to pay a certain amount of premium subscription at regular intervals. The premium amount will contribute to your coverage, the higher the amount, the higher the insurance cover.

Before buying an insurance policy, you have to play your game safe by ensuring the premium is within your limit. 

Compare your financial status and check if you will be able to afford to pay the premiums within the stipulated time.

#5. Select your beneficiary wisely

Settling for the suitable beneficiary is another thing that should be given a priority in your to-do list.

Most parents register their children as the beneficiaries of their cover in case something happens. But the insurance company will accept to pay individuals with minor ages so the guardian will be appointed to control the finances until the child reaches the majority age.

#6. Read the insurance policy carefully

It is highly advisable and essential to carefully review the terms, coverage premiums, benefits, termination, and the renewal of the plan before buying it. Below are the basic things you need to know about your policy:

  • The interest rate paid on the premium amount and again see the procedure to get the maturity benefits.
  • Enquire if the premiums or benefits vary every year.
  • The period for providing insurance to the beneficiaries in cases of untimely death.

The beneficiary should also be provided with information about the insurance policy, which includes terms and conditions.

#7. Compare policies

There are many insurance companies with a different insurance plan. Some may have different plans some may have the same features. It is your choice to make a personal decision on which policy you need. 

Prepare the list of your expectations and use it to pitch for a policy that will fulfill all of them.

Most cases insurance sales agent will lure you for an insurance policy. They will promise you heavens that will never exist when you claim for the payment. The agents are looking for their salary so they will do everything possible to convince you.

Do your research well and compare the policies from different companies. After that, go for what suit your needs.

#8. Tenure of the life insurance

The mandate of the insurance policy should be in the priority list during the application. The premium also depends on the tenure of the insurance policy. The longer the tenure, the more premium you will pay.

But the main concern comes from this question

What is the typical tenure for a life insurance policy?

There is no actual figure for this question, but you can go for a policy based on:

  • A maximum tenure that policy allows
  • Insurance policy up to the age you would complete your financial responsibilities towards those that depend on you.
  • The retirement age minus your actual age can also be considered as the tenure in some policies.

Selecting your best beneficiary before you buy a policy, and reviewing them more regularly is very significant. 

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