Before Taking an Insurance Policy

Insurance is an important part of financial planning - but understanding insurance and buying the right product can be difficult. Whole in the long-term life, riders to convertibility clauses, how do you make sense of all the choices? Most people rely on the expertise of their insurance advisor, broker or sales representative to help them make the right decision. Yet for some people, insurance representatives have developed a bad reputation, and many people do not trust the "recommendations" they receive.From my own experience in the insurance industry, and how officials are trained, I would not trust many representatives of insurance sales either. Here are some steps you can take to ensure you get the right product for the right price:

Understand your needs.  

Nobody understands your financial situation better than you. This means you should avoid letting someone else tell you how much protection you need. You can get a rough estimate of your insurance needs by adding your debt, estimated funeral costs, and six months to a year of income replacement. [Note JD: A common rule of thumb is to multiply your annual income by between 5 and 10 using the lower level if you do have many Dependents and little debt, and the higher level if you have debts and several large Dependents. But Ray is right. Understanding your own needs] Review your financial policy can allow you to choose the right policy for your needs. As a sales representative, we have been trained to sell large policies. Remember, you may not need an exorbitant policy - you need the policy that is right for you and the financial situation of your family.

Understand term insurance versus permanent insurance.

Understanding the difference between term and permanent life insurance (whole life: such as) can help you make an informed decision acerca your insurance needs. Today, a long-term insurance policy to cover must be reliable MOST of your debt and financial needs. In turn, you may not need to buy a whole life policy. Try not to be sold by the "what if" scenario that you hear from a representative power of insurance sales. Insurance companies traditionally make more profit from whole life policies that the long-term political, so be prepared to hear a sales representative promote whole life as the best possible choice (although it might not be the best solution for your needs). Remember, buy what you need and make the necessary adjustments Changes Becoming. Term insurance is typically renewable and should have a convertibility clause which allows you to make changes in the future. There are some situations where a whole life policy may be more Advantageous term; However, do not buy it just because your rep said you should.

Speak with an independent broker.  

These brokers have access to many more products that only one company can provide. When I worked as an independent broker, I'm reliable to offer my clients a lot more than just a product company.

Avoid the recommendations of a meeting. 

If your broker makes a recommendation to the first meeting, you know they have not really analyzed your situation and looked for better options. So just say, "No, thank you" and keep looking.

Understanding how the adviser is paid.  

Whether they are compensated through commissions, fees or added commission fee only. If there is no commission involved in the sale, make sure you look at all the available substitutes. With commissions, the advisor may have a conflict of interest. commission based-just because your consultant is that they do not mean they are bad - just ask more questions with them. I was still working on 100% commission, but I would give my clients several options and disclose if I am paid differently.

Recognize insurance is for protection - not investing. 

Provides term insurance protection only, without a savings component. The whole life and universal life policies have a savings component and are much more expensive. You are almost always better off just paying for term insurance, and using the cost savings to invest elsewhere.

Ask the tough questions.  

Do not be afraid to ask questions of the consultant. You must know the product inside before buying. Is the policy renewable and non-cancellable? How long are guaranteed for premiums? Is there an accidental death of driver? What are the exclusions?

Beware adviser "know-it-all."

If the advisor answers all your questions without reference to anything, or says she "knows everything", chances are it does not. Insurance policies are complicated, and even the best advisors do not know all the products 100 percent and may have to look at things. There is nothing wrong with that.

Compare similar products.

When the store prices, be sure to compare similar products.

Do not replace the old political lifetime. 

If you have had a lifetime policy for several years, try not to replace it. May you lose all bonuses unavailable. You may also have to pay new administration fees (if applicable), and reset some clauses manager (like the suicide clause). If your situation has changed and you need more insurance, just buy more. (This warning does not affect the long-term life.)

Do not buy expensive riders.  

The counselor may ask you to add all types of riders. Stay away from them unless we understand the need and fully. Again, there was always in training focusing on the sale of runners. Often I see no advantages for the customer.

Do your homework.  

Make sure you do your homework before buying an insurance product. Make sure it fits your needs and budget, and make sure you understand the contract. The counselor must explain. Do not sign the contract before understanding.

Take a free look 30 days.  

You have 30 days to review the policy and understand it. If you are not satisfied with it during this time, cancel the policy and get your premium back.

Keep it simple.  

Do not make your insurance planning complicated. Because it is based on protecting your family, it should be based on your needs. Do not fall for all the bells and whistles the company may try to sell you.

I hope these measures will help fourteen in your insurance planning. The basic concept is to educate yourself by doing your homework so that you 'can understand what you are buying.