Buying life insurance for the first time can be a confusing experience. Shoppers are unsure of what certain words mean, how the policy works, and why they even need life insurance. They may have a small policy through their job, or through their spouse’s job and think that is enough. Considering the amount of debt your family has right now, might prove that your very small policy will be of little to no help if you unexpectedly pass away.
The first thing you need to know is what a life insurance policy entails. A life insurance policy is a set amount of money that will be paid to a beneficiary upon your death. This amount can vary from a few thousand dollars, to well over a million and you can pick your beneficiary. Most pick their spouse, or one of their children. The policy may include a double indemnity clause in which the amount is doubled if the death is ruled accidental.
Before handing out a life insurance policy, the provider will ask questions relating to your background, lifestyle, and medical history. They are looking for people who have a higher than average life expectancy. This guarantees that they will receive money for a number of years before paying out the policy. They may also require a medical exam, or copies of your medical records.
It is important to remember that the monthly premiums must be paid on time, every time. Being late even one time can result in a cancellation of the policy. It’s equally important to remember that the company will double check all information submitted in the initial application. If they find anything false on the application, even if it was done in error, they can cancel the policy and are not required to issue a refund.
Those are only a few things that all first time life insurance buyers should remember and know.