Why should I take out life insurance?
First of all, it is important to clarify that contracting life insurance is not mandatory; even so, it could be as important as contracting car or home insurance.
Nobody likes to think about it, nor do we like to remember it, but none of us are exempt from suffering an accident or a serious or even fatal illness. Many times, because of “it will not happen to me,” we run the risk of leaving our partner, children, or loved ones in a compromising situation.
In the end, the lives of these people would continue even if we were missing, and if we had not been foresight, we might not have made a good decision for their future.
Hiring life insurance allows us to have the peace of mind that, in the event that something happens, money will not be a problem for a good period of time.
Who should take out life insurance?
As with anything else, it’s only smart to take out life insurance when you need it.
On the one hand, the fact of contracting AARP life insurance is designed to maintain the financial tranquility of the people who remain if we are absent, so the first thing we must take into account is if we have those people nearby.
Partner, children, parents of a certain age, dependents,… in many cases the financial support we provide is of tremendous importance for the future of others, so a misfortune can have long-term effects that we had not thought of at first.
On the other hand, the problem may be greater in case of not taking out life insurance if we have a mortgage loan, some own business, important fixed expenses, debts, credits … that will fall directly on our heirs.
The bottom line is that anyone with family or friends who may be financially affected by your death should take out life insurance to minimize risk.
How much does it cost to take out life insurance?
Interestingly, many people think that taking out life insurance is an important outlay when in most cases, it is not true.
To put it in context, taking out individual life insurance can cost a third of what it takes to take out car insurance with a franchise or a tenth of what it takes to take out comprehensive insurance for a new car.
Depending on your age or the amount you want to insure, taking out life insurance can cost considerably less than what you spend on your mobile each month.
The price of life insurance basically depends on your age and the amount of compensation you want to receive in the event that something happens (this is what is called insured capital ).
If so, the more you get, the better, right? A lot of times in movies, we see people getting insured for millions (usually dollars). In the real world, the cost of such insurance would be very high, so for those of us who live on earth, the capital must be less.
Yes, but then how much should I spend? Well, here are other current factors such as our salary, expenses that we normally have and other future ones, such as the cost of our children ‘s education, mortgages or loans.
So, is it better to take out the cheapest life insurance? Normally, this insurance covers a small amount, which in many cases will be insufficient for the future needs that you should cover.
Your heirs will not receive millions, but we will make sure to advise you so that you do not pay more than you owe or receive less than what they will need.
What does life insurance cover?
Life insurance can not only cover in case the owner dies. By contracting life insurance, the cases in which we would receive compensation can be increased.
For example, if we have an accident and become disabled, our life insurance could cover us, and we would collect the compensation contracted.
In cases like this, it seems clear that having available capital can mean a significant improvement in our own quality of life. Accessing specific care, adapting our home, trying treatments is something that can be very expensive, and the difference between being able to have them or not can be important.
Even more so, if we have an average income and to reach these services in other conditions, we have to resort to loans, family, or friends.
Of course, the more coverage and services we add to our policy, the more expensive it will be, especially when we reach a certain age.
For this reason, it is important to think about what risks we want to cover, why we would need compensation, and what we want to achieve with it. This way we avoid spending more and we can choose the best life insurance for us.
The situation of each one is different, and not everyone has to need to contract all the coverage or services of life insurance. You have to think that any added service is not free and means paying for it while the policy lasts, even if you don’t use it.
The basic coverage of life insurance is death, and Absolute and Permanent Disability can usually be additionally contracted. In the market, there are options to incorporate other coverages.
Sometimes it is more interesting to select simpler life insurance and invest the bonus for extra services in a greater compensation if something happens.
Why is there such a difference in price between some life insurance policies and others?
As in other types of insurance, when hiring life insurance, it is common to see significant price differences between one and the other. As customers, it is sometimes difficult to understand the difference between what appears to be the same product, so it is important to know what is in front of us.
Currently, we can access online insurance comparators that offer us prices for different companies at the same time.
These tools are helpful, but it’s important to know that not all products from all insurers are on those listings. Before taking out life insurance, it is a good idea to get information directly from the insurers to find out about the full range of products.
On the other hand, there are insurers that create specific products to rank well in those comparators (ordered by insurance price) and sell more. Sometimes these life insurance policies are cheap because they offer limited coverage at low prices to be attractive, but in the long run, they are insufficient.
It is also important to analyze the credibility and capacity of the insurers that are presented to us. On many occasions, these first places are occupied by small or little-known insurers that offer attractive prices as a strategy. This is very good, but we must be aware that the company we choose to contract our life insurance must be financially capable of paying us if necessary.
Life insurance is still a financial product. If you do not leave your money in any bank, also make sure that the company you have chosen to take out life insurance and that has to answer to your family if something happens is sufficiently solvent with its clients and the economic situation.
The indemnity of particular insurance should not be a problem for any insurer, but the economic environment in which we live, the economic crises, the type of investments that this company makes with the money of its clients… are factors that can make that a company is not as safe as it should be.
Choosing a company to take out life insurance is an important decision because we are going to trust them with the future security of our loved ones. It is important to analyze the offers, prices, reputation, and size of who is going to cover us.
We must make informed choices, thinking that cheap can sometimes be expensive, but also that we should not pay more than necessary.