How to choose the best life insurance? When hiring life insurance, many doubts may arise as it is a little-known market. It can be a tedious task, and although insurance comparators are often used, it is essential to have certain apparent aspects of choosing the right insurance for your specific case.
Why take out life insurance?
The main reason is simple: ensure the quality of life in an economic aspect of the relatives or dependents of a person in case of death.
There are numerous reasons to take out a life policy. Protect against unfortunate, unforeseen events, such as total permanent disability or other additional coverage, such as serious illness. On other occasions, it is sought to ensure the children’s future.
Life insurance risk
To begin with, let’s explain what risk life insurance is. It is a policy that ensures capital in case the insured dies. At that time, the beneficiaries would receive the money agreed in the contract. The main idea is to maintain the economic health of the family.
The price paid for the insurance is called a premium, and although there are other modalities, it is usually paid annually. The premium depends on the following factors:
- The age of the insured
- The insured capital
- The state of health
We will tell you more about the premiums and how they are calculated here.
Types of life risk insurance
There are two types of life risk insurance. It is essential to know what each one covers before making a decision.
Whole Life Insurance.
These extend their coverage throughout the insured’s life, and compensation is paid after the insured’s death.
Temporary Life Insurance.
They cover the risk of premature death while the contract is in force. Above other variables, the risk component prevails. It usually has an annual renewable premium for a certain number of periods. This type of insurance occurs to protect a mortgage or personal loan obligations.
You know that having a loan or a mortgage with a bank does not force you to link life insurance. If you have doubts about whether the life insurance related to your mortgage is mandatory or not and if the price suits your conditions, you can consult us here, we will be happy to assist you and help improve your needs.
5 Tips for Choosing the Best Life Insurance
Maybe you can feel overwhelmed by being such a sensitive subject and having to choose one of all the services within your reach. To make this activity a little easier, from Covent and offer you a helpful guide, check out these 5 tips to help you choose the most suitable life insurance for you and your family.
The first thing you should do before looking for life insurances to think about your needs and possibilities: income, people depend on you, you are single or married, you have children, of what age. The best life insurance is the one that adapts to you and will depend a lot on your vital moment, the time you want to hire it, the purpose, and your economic capacity.
Know and study all your options. Perhaps the idea of taking out life insurance came to you at the suggestion of your bank or insurer. However, before formalizing the policy, it is advisable to search to know what other financial institutions or insurers offer you. Since the entry into force of the mortgage law (Law 5/2019), banks cannot force customers to take out their life insurance to give them a mortgage. Insurance associated with the loan is standard because it can offer you some benefits and, above all, covers the expenses in case of death. But you don’t need to contact your mortgage life insurance with the same bank; you can always change it to another financial institution and link it to your mortgage.
It is essential to research and understand your policy’s features before signing. It’s an important decision with consequences for you and your family.
Calculate the Mortgage Penalty. In the case of changing life insurance, the mortgage will usually raise the spread by 0.05%, which translates into tiny monthly amounts. In any case, this penalty compensates, considering that changing the life insurance to an external insurer such as Covanta can mean a 30% saving concerning the policy offered by the financial institution.
It is advisable that the sum insured for coverage is equivalent to the necessary expenses of your family between three and five years, the time of margin for your family to recover financially. The insurer should allow us to choose the insured capital since the premium and the payment methods will depend on the total sum of that capital. This will help the family economy not to destabilize.
We must know these factors when choosing the best life insurance to protect our family. Another fundamental aspect is to select an insurer that allows us to determine the coverages that best suit our needs and transmit confidence and transparency. In Covent, there are people like you who want you to receive adequate and affordable insurance.