Most people today are already using life insurance. Life insurance provides costs according to the contract when the policyholder dies. The types of life insurance also vary so that customers can choose according to their needs. Even the insurance period is also divided into two types, namely long-term and short-term. But before deciding to choose insurance, you need to understand more about the life cycle of the insurance policy. In addition, insurance usually offers a fairly long term, such as 10, 20, and 30 years.
Purchase of Policy
Before deciding to buy a policy, you need to understand buying tips. Some tips you should know before choosing a policy:
1. Check Financial Condition
The first thing you need to do is check your financial condition. Buy a policy that does not burden your income. Do not let you use an emergency fund or retirement savings to pay for insurance. You really have to set aside money on a regular basis for years.
2. Understand the Amount for Your Coverage Needs
There are still many people who underestimate the cost of death, especially for parents who have children. It is important to help spouses pay for the daily living expenses of the children, pay for education, and also pay bills for those who already have a home. Take these needs into account to determine your insurance policy.
Life insurance usually only covers the life of the person who takes the policy. But death can make the coverage disappear, so your family no longer has protection against the insurance. If you take the premium payment package, the protection will continue for the family of the policyholder. Try to buy a policy with a premium payment with a nominal according to income.
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Customer Inquiries / Changes
There are many questions that customers often ask about life insurance. For example, regarding several types of life insurance that are often offered by insurance companies. There are at least two types of life insurance, such as term insurance and universal life. Term insurance is insurance with a period of time in premium payments. The premium payment in question can be in the form of monthly or yearly.
Premiums from insurance will entitle the insured party in the form of costs with a certain amount if he dies. The policy lasts for a certain period of time according to the rules provided by the insurance company. Most of the term that insurance companies use is 10 to 20 years.
Meanwhile, in universal life, policy is much more complicated than term insurance. In this type, customers still make premium payments. A portion of the company’s purpose is for insurance. However, there are several portions that insurance companies will use for investment. Funds obtained from investments make it possible to cover insurance premiums for a certain period of time. These programs often provide a policy that is valid for life.
Changes to the Policy
You can change the paid policy. But before changing policies, you need to understand the replacement policy. In addition, you need to consider many things, including whether the agent you are with is an authorized and trustworthy agent. Some of the reasons why you change a policy:
- Find a policy that is more in line with your income
- You experience a change in your living environment (moving house, job, and other conditions in a new environment)
- You choose a better policy, such as whole life insurance
- You make changes to your financial condition
Lapse of the Policy
Lapse of the policy does not always mean termination because it can mean entering a grace period when the customer misses the payment period once. The policy which is in the grace period remains in effect even though it provides limited benefits. In a whole life insurance policy, the lapse of the policy will be covered by a cash value loan automatically.
Those of you who want to take life insurance need to understand what the status of paid-up life insurance means. Paid-up status on this topic can be interpreted as customers no longer needing to pay premiums and benefits are still valid. Usually, this often applies to whole life insurance policies. The insured will continue to receive lifelong protection as long as you continue to pay the policy premium.
Surrendering the Policy
After a long time paying premiums on a policy, you will realize that there are weaknesses in a policy. It could be that a policy does not fully provide protection or return on customer investment. It is important to terminate the policy and the correct term is surrendering the policy. Customers should stop paying premiums before the due date.
Cancellation of the Policy
You can also cancel a term policy. Canceling a term policy is quite easy as you just have to stop paying premiums. Then you just need to contact the insurance company and tell them that you are canceling the policy.
Death of the Policy Holder
When you first take a policy, you can choose the person who will receive the death benefit. Some people who can get death benefits are spouse, parent, sibling, adult child, business partner, a trust, and charitable organization.
Taking a Loan
People who pay premiums and have a life insurance policy can take a loan with a certain method. The method is that someone previously submitted an endowment policy or money back.
Maturity of the Policy
Life insurance also offers maturity benefits which the policyholder can claim. The client only needs to fulfill all maturity tenures and the company will provide the right amount for maturity benefits.
Payment / Closure of the Policy
Anyone who wants to implement a closure policy needs to take several steps. For example, bring the original policy bond, printout of the surrender form policy, and the rest follow the policies that exist in each life insurance company.
Each insurance company provides different life insurance services. If you intend to close your life insurance policy, you need to carry out the surrendering procedure correctly in order to get a refund. But you need to immediately get new life insurance that is more suitable for your needs.