What should I do before buying life insurance?

What should I do before buying life insurance?

When buying life insurance, you should look for the policy that will give you the most protection at the most reasonable premium.

When considering a policy, we recommend that you follow these steps:

Decide what coverage you need

Determine how much you can pay

Choose the one that best suits your needs from the various coverages available

Choose a reputable insurance company

What types of life insurance are there?

In the case of life insurance, in the event of a specific event (usually the death of the insured), the insurance company will provide cash compensation to the beneficiary. Life insurance companies offer a variety of different policies and knowing the basic concepts of each policy will help you buy a policy. There are three types of traditional life insurance:

(i) Term Insurance

Term insurance provides coverage to the insured for a specific period. When the validity period expires, the policy will lapse. If the insured dies within a specified period, the beneficiary will receive a death benefit. Generally speaking, of the three types of life insurance, term insurance provides the greatest immediate protection at the lowest cost.

Certain term insurance policies are renewable; the premium may increase with each renewal as the insured ages. Before deciding to purchase this type of coverage, you must calculate how much you will pay in future premiums and how long the policy will last.

Some term plans are “convertible”, meaning that, before the expiry of a specific period, the term plan can be converted into a whole life plan, savings plan, or any other policy specified by the insurance company, regardless of the health status of the insured. The premium for the new policy will be determined based on the requirements of the new policy and the age of the insured at the time of conversion.

(ii) Whole life insurance

Generally speaking, whole life insurance provides coverage to the insured up to the age of 100 or above. Premiums are determined based on the age of the insured at the time of purchase of the policy, and generally remain unchanged during the term of coverage (unless otherwise specified by the insurance company). Unlike term insurance, whole life insurance accumulates cash value for use.

(iii) Savings Insurance

Savings insurance is insurance that guarantees you a lump sum of cash at the end of a certain period. If the insured dies before the specified period, the beneficiary will receive a death benefit.

The above three types of insurance have their differences, but they also have some commonalities. Many insurance plans combine features of all three. There are many types of insurance available, and you should be able to find one that fits your needs. 

What is an investment-linked life insurance plan?

Investment-linked life insurance plans are investment-related life insurance plans whose benefits are linked to the performance of the investment options you choose. Like all insurance policies, your investment in an investment-linked life insurance plan is subject to the insurance company’s credit risk. Generally, an investment in an investment-linked life insurance plan is a long-term commitment and the policyholder is expected to hold the policy for many years. Surrender or cash withdrawal in the early years of the policy or involve fees.  

What is the amount of life insurance coverage required?

If you are the insured, the way to determine your life insurance coverage is to assume how much cash and income your loved ones will need in the event of your death. Things to consider include end-of-life care costs, funeral expenses, and personal loans and debts. Your policy should provide enough cash to cover these expenses, plus of course enough to cover your family’s living expenses, your children’s education, and other future expenses.

Regardless of which policy you decide to choose, try to narrow the gap between (1) what your family needs, and (2) what your family gets.

How much should I pay?

When it comes to life insurance, the policy with the lowest premium is not necessarily the best policy. Therefore, when choosing a policy, you should focus on whether the policy provides all the options and benefits you need to meet the needs of your family now and in the future, not whether the premium is the lowest.  

Will premiums be cheaper if I buy insurance while I’m young?

Yes. Generally speaking, the older the insured age is, the higher the risk the insurance company is exposed to, and therefore the higher the premium. In some cases, insurance companies may even refuse to accept insurance applications due to the health of the insured.  

What are the benefits of life insurance?

One of the easiest and most effective ways to ensure your family is protected is to purchase life insurance. Due to the various expenses incurred after death, the insurance benefits can protect your family from the fear of being unable to meet the basic daily expenses. They can also use cash compensation to continue living.

In addition, if you buy whole life insurance, you can also get extra cash value in the policy and even receive dividends, depending on the type of policy you have taken out.

Do I have to have a physical examination to buy insurance?

uncertain. The insurance company will decide whether the insured needs a medical examination according to the insured’s age, the amount insured, and the health condition. The insured is required to truthfully declare past health conditions and medical records so that the insurance company can use them for underwriting purposes. 

What is a suicide clause? If the insured dies by suicide, will the insurance company pay the death benefit?

The life insurance policy is accompanied by a suicide clause, which regulates the compensation for the death of the insured due to suicide. In the event of the death of the insured within a specified period from the policy issue date or any reinstatement date, the insurance company will only pay the premium paid. If the term of this clause has expired when the suicide occurs, the insurance company will be required to pay the death benefit.

What is an indisputable clause?

This clause states that, except for misleading material facts, fraud, or concealment, the insurer may not challenge the policy after the policy has remained in force for more than a specified period during the life of the insured from the date of issue or any reinstatement date of the policy. Unless otherwise stated, the non-controversial clause also applies to any additional benefits under the policy.  

My relatives and friends in mainland China are interested in applying for insurance, is it possible?

Can. Since all relevant procedures (including sales, application, and signing of all relevant documents) must be carried out in Hong Kong, Mainland Chinese residents must visit Hong Kong to apply for insurance. The policyholder is required to provide proof of entry to our Customer Service Centre of Excellence and the relevant documents will be verified by a medical service provider or a designated representative designated by the insurance company.  

How can a life insurance advisor help plan my financial plan?  

In a complex and rapidly changing world, a life insurance advisor can help you with financial planning. Good life insurance advisors are professionals, fully supported by a reputable company, generally highly trained, and experienced in analyzing financial needs. Conducting financial needs analysis for potential customers before selling can help customers understand their insurance needs and financial situation, as well as whether the available insurance products are suitable for their situation. Plus, you can leverage their expertise to design a comprehensive insurance plan for your needs now and to protect you in the future.

How do I store the policy?

Keep the policy in a safe place where the beneficiary can easily pick it up. Also, please write down the policy number and storage location to ensure that claims can be processed as quickly as possible after the death of the insured.  

If the original policy is lost, will my coverage lapse? Will it affect future claims?

The loss of the original policy will not invalidate or affect future claims. As long as the premium is paid within the grace period, the protection will still be effective. In addition, policyholders can also apply for a replacement policy, subject to administrative fees.

Can I check the policy contents online?

Customers can use the electronic service platform on the company’s official website to inquire about the policy content.  

Is there any grace period for premium payment?

have. We offer a grace period for premium payment of 31 days or one calendar month (from the premium due date), depending on the product. Please refer to the relevant policy documents for details. 

How to switch auto-transfer accounts?

All you need to do is complete and return the direct debit authorization. As the processing time generally takes about six to eight weeks, you are required to prepay two months of premiums to coincide with the activation date of the autopay service.  

What is cash value?

Both whole life insurance policies and savings insurance policies can accumulate cash value, which is paid upon surrender or maturity of the policy. The cash value generally increases year by year while the policy is in force. Some whole life and savings policies are available for loans, and policyholders can apply for a loan amount of a percentage of the cash value. Policyholders only need to sign a loan application form to borrow. This loan is subject to interest.

If the policy is suspended from paying premiums, and the policy has an “Automatic Loan Payment Clause” and the cash value is sufficient to cover the outstanding premiums, the insurance company will advance the accumulated cash value of the policy in the form of a policy loan to pay the premium. Pay premiums due. This clause is designed to keep the policy in force to protect you and your loved ones. Again, such loans must pay interest.  

What is a bonus?

There are two types of bonuses – annual bonus and terminal bonus: participating life insurance products offer annual bonus, terminal bonus, or both. Dividends are your share of the Company’s distributable surplus. Bonuses are not guaranteed benefits. Whether or not the bonus is paid and the relevant amount is solely at the discretion of the Company. Annual dividends are determined and allocated to participating insurance plans on the policy anniversary date. The dividends allocated to the policy can be used in different ways. In addition to cash withdrawals, policyholders can keep dividends with the company to accrue interest, purchase additional paid-up insurance, or pay premiums. The terminal dividend is determined by the company at its sole discretion. When the insured passes away, the policy is surrendered or the policy expires, the company may pay an additional terminal dividend in addition to the life insurance premium, surrender value, or maturity value. This terminal bonus cannot be used to purchase reduced paid-up insurance, rollover insurance or to determine the policy loan amount. For certain products, in addition to the death of the insured, surrender of the policy, or maturity of the policy, the Company may also pay a terminal dividend upon the occurrence of certain predetermined events.  

How to change the policy content?

If you need to change your address, beneficiary, or change anything in your policy, please contact your life insurance advisor or call our Customer Service Centre of Excellence for procedures. In addition, you can use Andreas Life’s electronic services via the Internet to inquire about policy information and download required service forms. 

How can a beneficiary file a claim?

In the event of the death of the insured, the beneficiary shall notify the Company immediately. The family members are required to provide the original death certificate of the insured person for verification, and the beneficiary must also fill in the designated “Compensation Application Form”. After the company receives the completed “Compensation Application” and all relevant supporting documents, the approved insurance benefit will be distributed to the beneficiary through the life insurance consultant. Our professional life insurance advisors are familiar with the procedures and are sure to assist you when needed. 

By Master James

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