MIG Shares What to Look for in a Life Insurance Policy
While the number of people who purchase life insurance policies remains statistically small in comparison to the overall U.S. population, the prevalence seems to be rising. And rightly so. After all, the fact that the costs keep going down while prospective benefits rise is definitely making it much easier for buyers to secure these long-term benefits.
Unfortunately, as with any type of contractual obligation that one may be unfamiliar with, there is a lot of insurance knowledge that one has to possess in order to secure a favorable offer. If you do not have this knowledge, it is very likely that you will be given a policy that does not satisfy your primary needs or results in a less-than-desired payout. This begs the question- what are the most important things to look for when shopping for life insurance?
Lump-Sum, Immediate Payout
Obviously, the most important part of any insurance policy is going to be the payout. According to MIG, an insurance agency formerly known as Mauro Insurance Group that works in Maryland, D.C., Virginia, and Pennsylvania, the payout is the lump-sum of money provided by the insurance company upon the death of a client. Insurance companies take the premiums that you pay and invest them, which is how the companies are able to make a profit. When individuals pass away earlier than expected and their survivors receive hefty lump-sum payments, the companies are able to remain profitable because of their investments.
Expectedly, the higher the lump-sum payment, the riskier it will be for the insurance company in question. Thus, it comes as no surprise that many organizations are attempting to minimize the cash that has to be paid to beneficiaries. Doing so affects their bottom line negatively and throws budgets out of order. This is why new buyers should conduct research between at least a dozen different alternative companies. While doing so may not guarantee the best financial outcomes, it will certainly help eliminate a few bad apples that have been known to offer below-market rates.
The Beneficiary or Beneficiaries
After finding the right policy that you are satisfied with, you have to figure out who your beneficiary will be. In the vast majority of the cases, people chosen to perform this role are close family members who will suffer the most after an untimely death. Regardless, MIG reminds us that holding a conversation related to being someone’s beneficiary is difficult but necessary. Still, it is crucial to have an individual designated for this role and new insurance policy clients must figure out who to ask long before they begin any insurance paperwork.
While having an enormous payout through a life insurance policy is outstanding, it should not cost one the vast majority of their disposable income. In translation, just because a person may want their children to split millions of dollars upon their death does not justify paying sky-rocketing life insurance monthly premiums.
The only thing that such an approach would succeed in is the rapid destruction of all current cash. Thus, a great rule of thumb is to take out no less than approximately six percent of the current income and spend it on insurance premiums. In the case of multi-member families who have additional dependents, the percentage should be by an extra percent to account for any downturns.
Provider’s Track Record
As with practically everything done in the healthcare industry and almost any other business, professional reputation has to remain impeccable. This is because it reassures prospective buyers about the entity’s regimes, daily control checks, and so on. So, when comparing a few different options and plans, it is important to do some online inquiring to figure out if the providers are acceptable and how much risk they carry. That way, the odds of losing the money invested in the policy down the road will be minimized.
Potential Living Benefits
Another great reason to open a life insurance policy when you are young is the potential of a cash benefit when you are alive. There are certain kinds of life insurance policies called whole life policies that allow you to build up a cash value as the years pass. Included in your monthly premiums is a cash value that increases overtime. Say you have been paying your life insurance for 15 years. After 15 years, you decide you want to buy a new car or some medical expenses come up you need to handle. After having a whole life policy for this long, you have accrued a good amount of cash value that you can take from your total payout and spend now. This is a great way to ensure that your future is comfortable.
Try an Insurance Agency!
If all these different aspects seem overwhelming, there is a solution. Instead of checking with insurance companies individually and comparing plans and rates, you can go through an insurance agency. An insurance agency is a company that works with multiple different companies and compares rates for you so that you are able to pick the best one for your personal situation.