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The moment when you decide to sign up an
insurance policy, you know it is going to be a long term commitment.
That is why choosing a right policy from the very beginning is
important. Here are some suggestions:
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First of all, you need to find out the
purposes of buying insurance. Is it for your own protection? Or is it
for the sake of your aging parents, so that if any unexpected event
happen to you, they will be well taken care of? Or could it be your
obligation to your spouse whom you love very much? Perhaps you are
worried of your children's welfare should premature death occurs. You
need to find it out.
Search for insurance companies which may
provide you with the relevant helps. The easiest way is to get the
lists online. You may also seek assistance from your friends or
colleagues to get the contacts of various insurance companies and their
own agents or financial advisors. Seeking reference is always good
because your friends usually recommend the company, agent or financial
advisor whose service and professionalism is within their satisfactory.
Call up the agent to find out more on
various types of life insurance policies. You may listen to the advice
of the agent. Seeking for his professional opinions. But, the final
decision is yours. Decide the face amount you want to insure. There are
plenty of different approaches to determine what is your insurance
needs. The Rule of Thumb is to prepare at least 7 times of your annual
income. It could also be as complex as to prepare enough to cover all
your current debts and/or all your dependants future expenses until
your youngest child attain independent age.
Before you decide which plan to buy,
always see if there is any way you can save. Generally, there are 2
types of policies, whatever names you may call them. The one with cash
value build up, namely whole life, unit linked, universal life etc and
another without cash value build up, namely term life. A term life is
good if you have budget constraint or you simply want to save on
insurance costs. On the other hand, whole life has its own advantages;
besides providing coverage, it forces you to save more. Eventually, you
can enjoy the cash value of the policy. But if you surrender the whole
life policy too early, you may have to do it with some losses.
Another area to consider may be the
tax
factor. If you are in the high tax bracket, you may want to consider a
whole life plan. On top of getting the higher tax relief by buying
whole life plan (usually higher premium for the same amount insured),
the cash value of the policy is also tax deferred.
Combination of plans is always possible.
Sometimes you may need to purchase different plans to cater for
different needs. At any one time, you may not be able to get the full
coverage needed. Just buy to solve the critical ones first. Sooner or
later when your financial position improves, go for the top-up.
The process of choosing the right
insurance policy requires your consideration on various aspects. It is
an ongoing thing and you need to frequently review your plans. There
are always changes in your life. The significant events like marriage,
child birth, owning a new house etc will always create new needs to
revise your plans.
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