Life insurance has to be a part of your financial planning, just like the 90 million American families who’ve already made it a part of theirs. It’s a critical safety net that offers your family much-needed financial safety in case of your untimely death. And since we live in unpredictable times, with the aftermath of the COVID-19 pandemic still hanging over our heads, you cannot deny the importance of life insurance planning.
However, life insurance management is often an uphill battle for most people, especially without professional guidance. It is only natural to feel overwhelmed when selecting your policy, understanding its terms, or deciding the premium. Don’t worry. At the end of this post, you’ll have a clear idea of how to choose your life insurance policy and what goes into its proper management.
Let’s get started!
How to Select the Right Life Insurance Policy
Term life, whole life, universal, with so many options to choose from, you might feel overwhelmed when deciding which policy fits your requirements and budget. But if you pay attention to a few critical things, your life insurance planning can feel like a breeze.
Here’s what you’ve got to do:
Evaluate Your Needs
It’s not a pleasant topic to discuss, but your life insurance coverage needs to be enough to cover the financial loss your family has to bear after your death. On average, it should be 10 to 15 times your income. But this may vary depending on where you live, how big your family is, and your age. You can use an online calculator to understand how much insurance coverage you require.
Understand Key Policy Features
Policy documents are lengthy and full of legal jargon. It’s not everyone’s cup of tea to go comb through these documents word for word. But you should at least check the key features of your policy, like premiums, death benefits, and cash value growth, among other things.
You might also want to consider a policy’s extra coverage for specific situations, such as accidental death or critical illness. This directly affects your life insurance management.
Consider a Reputed Local Insurance Company
When we say local, we mean an insurance agent or office within your driving distance. For example, if you live in the Sunshine State, a local agency offering life insurance services in Florida, particularly in your area, might be a great fit.
Why? Because:
- It’s easy to reach your local agent if you have doubts or need to revise your policy.
- Local experts understand your insurance needs better than online tools.
- They can help you understand your choices and educate you about life insurance planning.
- Local consultants often provide other financial services, which simplifies your wealth building.
Always Compare Policies
There is no shortage of insurance companies or insurance products in the market. In Florida, for instance, you will come across term, whole, universal, and variable policies, with each option and company offering different benefits (and drawbacks).
If not understood before signing the document, these terms can become a major headache later. So, always compare the shortlisted policies to ensure you get the best benefits for a reasonable premium.
5 Proven Strategies for Effective Life Insurance Management
Selecting the right policy and its effective management are two sides of the same coin. If your policy is not updated regularly or lacks specific riders or added benefits, your family will be hung out to dry.
Here’s what you should do to avoid this:
Review and Update Your Policy
Our lives continue to evolve with time. Maybe you didn’t have kids when you took out your policy, but now you do, or you’ve got a new, high-paying job, and your lifestyle has improved. All these changes do affect your life insurance planning.
Review your policy at least once a year to ensure it meets your changing requirements. You might need to adjust your coverage or add or remove a rider to meet your requirements. Think it over and make the necessary changes as soon as possible.
Update Your Beneficiaries When Required
Another critical factor in effective life insurance management is updating your beneficiaries. This is needed when you go through life-changing events like marriage, divorce, or welcoming a new tiny human into your life. Be sure the benefits go to the right people after you’ve kicked the bucket. This simple step protects your family from financial uncertainty.
Manage Your Policy Debts
Most life insurance policies have a cash value component, allowing you to borrow money against it. But know how this affects your policy payout before borrowing the money. If you fail to repay the debt on time, the policy coverage may reduce, or worse still, your policy may lapse, leaving your loved ones unprotected.
Think About Riders and Additional Benefits
Riders are optional add-ons that provide extra coverage. The most common riders include accidental death, waiver of premium, and critical illness coverage. However, your insurance provider may offer other unique riders and add more value to our policy. Understanding these riders is a part of your life insurance management. Talk to your insurance company about the riders, how much they cost, and how they can benefit you.
Consult A Financial Advisor
You should not take life insurance planning should not lightly since it affects the future of your loved ones. We recommend speaking with a financial advisor to understand your options and choose a policy that protects your legacy. These seasoned experts often provide other financial management solutions, helping you to balance your debts, investments, and insurance more effectively.
Secure Your Family’s Financial Future Today
It’s never too late to start planning your financial future, including life insurance coverage. Just make sure to understand the terms, premium costs, riders, and other factors involved in your policy. But more importantly, keep your policy updated to make sure your loved ones receive the financial security they deserve after you die. This should straighten your life insurance management.
