If you’re currently shopping for a life insurance policy, bear in mind to do the following:
- Never choose the first life insurance option you see
If you are working with an insurer, never trust the first insurance company that they recommend. In order for them to make an informed decision or recommendation, they need to know your current financial situation, debts, and other money-related concerns that you may have. Even if you have an insurance broker to help you out, do your own research too!
- Know how your insurance broker gets paid
Insurance brokers get paid in three ways: commission only, fee-plus-commission, and fee only basis. Those who work on commission may only promote a life insurance option from one or two insurers because they will get paid if they do have a successful referral. The insurance they are selling may not be the best, and brokers are often faced with conflict of interest when this happens. Make sure to do your thorough research on the different life insurance options too!
- Insurance is for protection and not an investment tool
Term level insurance primarily provides protection. It does not have a savings or investment component unlike permanent life insurance policies. On the other hand, whole life and universal life all both under permanent life insurance are both expensive in nature due to the savings component and cash value that can be used by policy owners in the case of emergencies. If you’re not that keen on investing, it’s always best to get protection first and foremost. You may also use the extra cash in more worthwhile products or services for investment.