Investment NEWS

How to buy life insurance

Published by author on November 11, 2009

Life insurance is a protection if the insured dies. For example, if I was insured by an insurance product and die tomorrow, then the insurance companies will provide insurance money to my family.

Actually, choosing life insurance products are not much different from choosing other products:
* Don’t buy life insurance if not necessary; and
* If you need life insurance, buy life insurance that provides adequate protection.

Do not buy life insurance if not necessary

Children don’t need life insurance protection because it does not have any dependents. If the child dies, the family will grieve, but it will not adversely affect the financial condition of families. On the contrary, precisely the family finances would improve because the number of dependents decreases. Buy life insurance child at this stage will only give free money to the insurance company.

People who have money and have not dependents do not need to buy life insurance. People without dependents and no liability to third parties do not need life insurance because if the person dies, no one feels lost.

Buying life insurance with enough assured

Basically insurance money should be sufficient to pay the debts paid off, cover the cost of educating children and to maintain the lifestyle the family, at least for sometime.

Choosing the right insurance products

The most appropriate product is term life insurance. Term life insurance is pure insurance product no-frills investments. If the insured dies during a dependent, then the left will get the sum assured. If the insured is still alive at the end of coverage period, then the premiums will not be back.

The characteristics of term life insurance are as follows:
* There is no investment element or for the results
* The length of coverage period is relatively short and not for life. Usually sold in units of 1, 3, 5 or 10 years.
* At the end of coverage period, customers have the option to renew contracts with large premium increases in accordance with the provisions stated in the policy.
* Price premiums are relatively cheap.
* Almost never offered by insurance agent because the commission they earn less than if they sell unit-linked products. Customers must ask for specifically, or even visit insurance company offices.

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