People actively buy assets such as home or car against a loan. Most people plan for the worst before buying, However, they don’t take into account their premature death. This can put their loved ones in deep financial problems without any help. We are not advising to stop taking a loan, or you will die early but suggesting that taking a Life Insurance covers you for the worst scenario. Here are a few things you need to know before buying Life Insurance:
- Working of Life Insurance: Life Insurance is a contract between you and the insurance company. You will pay the company a fee, and in return, they promise to pay back a tax-free lump-sum to your nominee. Hence, if you opt for Life Insurance in Brampton and pay a fee which adds up to 100,000$, then that’s the money the insurance company will pay back with interest upon your death.
- Cost of Life Insurance: The cost of Life insurance depends upon a lot of factors such as the type of policy, number of beneficiaries, your age, health, sex, drinking and health habits, etc. Many Insurance also asks you to undergo a health checkup to find any life-threatening disease. Hence, if you are suffering from AIDS, you will have to pay more than a healthy person.
- Term and permanent insurance: There are two main categories in life Insurance: Permanent and Term Insurance. In simpler words, Term insures you for a fixed number of years, i.e., 5,10, or 20 years while Permanent Insurance last throughout your life. Anyone can opt for permanent insurance while term Insurance is popular among senior citizens above 60 years old.
- Creditor Life Insurance: If you take a loan or a mortgage, the financial institution will offer life insurance called Creditor Life Insurance. Your loan will be repaid after your death. However, the financial institution will pay the loan directly without any involvement with your nominee. This can create a problem; hence, you need to look for more flexible life insurance.
- Group Insurance Benefits: If you or your spouse has group insurance coverage through your employer. It will also include life insurance, and you can plan accordingly. For example, many group insurances allow you to pay extra to cover additional levels of insurance at very cost-effective rates.
These are the things you need to keep in mind while buying life insurance.