What Factors Affect Your Choice of Life Insurance Policy?

When you are choosing a life insurance policy, there are a number of factors that will go into consideration. The premium amount, payout as well as the kind of life insurance you choose will be affected by a variety of things, both on your part as well as that of the insurance provider that you choose to take a policy with.

The thing to keep in mind at all times is that a life insurance policy is not just a way to ensure that your family can stay financially secure in case of your demise. While the replacement of the productive value is a major factor, life insurance is also considered an extremely sensible investment that can benefit you, especially after retirement.

When you look at it from the point of view of an investment, you will understand that the capacity for wealth generation is huge. The returns that are paid out periodically can either be left to accumulate or invested into another savings plan. Since it keeps generating a cash value this way, a life insurance policy performs the task of revenue generation too.

What Are the Factors That You Should Consider?

While making a decision about a life insurance policy will start right from the kind of insurance you choose – term insurance or whole life insurance – all the way up to the amount of the premium that you will be paying. Some of the major factors that will be taken into consideration include:

  • Personal Profile – This will be created by the insurance company that you approach, based on aspects concerning your health and lifestyle, like your age, earning capacity, genetic disorders in your family that may come up in the future, etc. You will need to take medical tests to determine your current health, based on which your risk value will be determined for the insurance provider.
  • Budget for the Policy – The amount that you can comfortably pay will generally be a large part of the decision-making process for an insurance policy. If you can afford higher premiums, you may want to consider whole life policies, as they will prove to be more advantageous in the long run. On the other hand, if your budget is limited, you can always start with term life insurance and then change to a whole life policy later on.

  • Beneficiaries and Returns – The major reason for taking a life insurance policy is to ensure that your family or dependants will be financially secure in case of your demise. Therefore, it’s essential that they can access the cash value of this policy and there will be no hitches in such a scenario. If you wish to withdraw the interest and returns for your use or reinvestment, the policy should provide you the flexibility to do that too. Sometimes, you may even be able to take a loan against the cash value, so ask about that option as well.

There are, of course, other things will affect your final decision about your life insurance policy. Make sure that you shop around and get the best quote before signing up for one, as you may find that a little research could actually get you the best rates for whole life insurance!

Categorized as Insurance