Life Insurance-Understanding Life Insurance Risks

March 10, 2009 by  
Filed under Life Insurance

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Indeed life insurance helps you with critical moments of your life and it is indeed reliable and useful in its ways. However, if you are not aware of its risks, you will find yourself ending up in a pile of debt and a truckload of problems. This article will help you understand the possible risks in order for you to take the right choices and give you a peace of mind.

The most troublesome part of having life insurance is cost. There are many life insurance policies that only support funeral expenses with the catering services and the likes. And most benefits do not offer you more than $15,000 to $20,000. Some of these life insurance policies are very expensive and are based only from the gender and age of the insured.

If you are not careful with this, and if you don’t read the life insurance quotes, exemptions, terms and conditions, you will be one of those individuals who are paying the life insurance company more than the premium life insurance rates you have applied for. At times, these rates cost more than the death benefit of the plan. So understanding the entire coverage of the plan is a must. Skipping the fine print within the contract will not help you either.
In some guaranteed life insurance policies, there is what is called graded benefits, wherein the insurance company protects itself from individuals, those with a short time to live, who wants to apply for life insurance. Some policies may indicate that if the person dies within the time duration the policy provided, the insurance company will only be paying for the premiums and the interests accrued to the applicant, other than that, there will be no further financial support given.

Getting a physical and medical check-up before obtaining life insurance is traditional. This determines whether you are eligible for the life insurance or not. If you are eligible, then you may have the advantage of paying less and getting more benefits as compared to getting a guaranteed life insurance policy. However, guaranteed life insurance is a better option if you find it hard to apply for other policies due to your health condition or your current age. It is always advisable to have a financial advisor to help you in terms of other possible options.

An insurance company may actually refuse to cover for individuals having unhealthy conditions, in some cases like diabetes, cancer, obesity, and other diseases. It is their prerogative to do so. Thus, it is always recommended to read through all the exemptions and life insurance policies before you decide to opt for a policy. In some cases where they do accept these conditions, you will find yourself being charged more.

A younger applicant for term life insurance gets to have the advantage of paying less than middle-aged individuals. Renewable term life insurance cost may be higher than a standard life insurance policy, however the individual may not have to go for another physical exam for the renewal. But some insurance companies may require new medical records at the time of each renewal.
Whole life insurance is advantageous to young adults, getting a more reliable security, rather than in term life insurance. Why? Whole life insurance will guarantee the person during his whole lifetime – so there is no expiration date. Once the premium budgets are set, regardless of changes in the person’s physical status such as health, weight, age, the stipulated amount is guaranteed at the time of the person’s death. However, whole life insurance will cost more for younger individuals, while term life insurance will cost more for middle age individuals.

Thus with overall knowledge on the risks you have to consider for the types of life insurance, you will be able to at least determine the advantages and disadvantages for you and your family. Getting a life insurance is like having an emergency fund while at the critical time of your life, at the same time reassuring you that your family will be safe at the time when you are gone. Hopefully this article will help you make your decisions before shopping for life insurance.