What to know when having a life insurance

The matter of life insurance is not an easy topic to deal with. We will be starting to go through it little by little, with several articles that will be appearing on this site and that will go round several aspects of this issue. From different kind of policies to advantages and disadvantages you have to take into account, we’ll try to provide you with the best information possible, making use of various sources to get the best data and process it for you. In this specific article, you will be able to read through an overview on general aspects of life insurance policies. The origins of the term, its meaning, and some brief considerations on how to work and decide on the best option that meets your needs. We have to consider that even though some criticism that has been raising lately, life insurance is a good way to have your relatives covered in case of unexpected events or sudden deaths.

As for the legal aspects of life insurance, we should cite wikipedia: it is a contract “between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness”. In this case, the insurer commits itself to pay a certain amount of money, previously arranged, at regular periods of time, or in lump sums (one-time payment). This has to be agreed beforehand in the contract of the policy. The life insurance policy is agreed between the insurer, which is the company that will pay the money when the insured dies; the insured, that is the person whose death is lied to the policy; and the beneficiary or beneficiaries, people included in the policy who will receive the specified amount of money if an insured event occurs. It is very important to know that “insured events” sometimes can be tricky and everyone should be aware of this and look very well, read thoroughly the contract before signing, so as to avoid future problems from the company saying “this event was not covered by your policy”. Preventing yourself from this will save you money and peace of mind. To give a general view, we can list in detail the possible events that can be covered by a life insurance policy, and this should be very well looked at: events included may vary and they might be: serious illness or critical illness and accidental deaths. Sometimes, life insurances won’t be taken against a terminal illness previous to the insurance. That will depend on the company providing the policy.

So when having everything in your mind, and needing to choose a whole life insurance, a policy that covers you until your death (we’ll see in another article the difference between whole life insurance and term life insurance, two types of policies that may be agreed), you need to ask yourself some questions, regarding what events the policy include, what is covered, the beneficiaries that you can choose. To summarize, we’ll give a list of points that you should not lose sight of, so as to have the best life insurance possible: first of all, as we mentioned before, you have to be totally sure of the events covered by the policy. The policy should not be invalid after a certain death. This is why professional advice is required, so as to tell you what is the policy exactly implying. As compuquotes.com notes, you might have a high risk sport hobby, for example bungee jumping. The policy, then, may cover accidental death, but not high risk sports. And if something happens to you when practicing bungee jumping, the beneficiaries will not be eligible to claim for the insurance. Also, as stated by the same cited source, sometimes getting policies for critical illnesses fail to cover some particular illnesses that the insured doesn’t know aren’t covered. And after purchasing the policy, there’s no way back.

A second aspect to mention is that in most policies you can name several beneficiaries, not only one. And there is no limit in the relationship you need to have with the beneficiary. They can be your kids, a friend, your brother, your fiancee. There is no limit there. The claim, after the decease, should be made by the beneficiary or beneficiaries. They are the only entitled people to do it, provided they give all the information required by the company.

A third crucial point is related to the circumstance of missing a payment. As stated by compuquote.com, “most insurers will give you a grace period of at least one month to repay a missed payment, after which the policy lapses. Many also provide a second grace period to give you time to resume payments”. This second grace period is the last chance to do it. If you miss it, the company will end with your policy, without giving you back any previous money paid.

The last thing to know is that in some cases you may have some discounts on your monthly payments when paying anually in advance. It may not be a lot of money, but still you can save some.

These are general aspects that you should be aware of when deciding to get a life insurance, a relief for your family. It is not nice to think when you are going to die, yet it is also rewarding to know that whenever you leave the world, your family will be covered with something.