Choosing the Right Type of Insurance

Buying insurance, may it be life (whole life insurance, endowments, etc.) or non-life (auto insurance, property insurance, etc.) is always a big purchase. It involves a lot of headaches from choosing the right insurance company to choosing the best fit insurance plan for you.

So what kind of insurance should you first get? Should you first get a life insurance or a non-life insurance? Should you first protect yourself or your car?

The answer seems obvious isn’t it?

I know many people who have cars and have full auto insurances in all of them, while they don’t even have any insurance for themselves or their loved ones. They’re fully covered for anything that might happen to their car but are completely unprepared for things that might happen to them.

 

Image Credit: Monkey Suit by Del Far

Make Life Insurance your priority when buying insurance.

I’m not saying to get life insurance. What I’m saying is that if you are buying insurance, at least buy insurance which is for you first. At least be prepared if something might happen to you. (Knock on wood).

Knowing what kind of life insurance for you is best.

Below are just some of the types of life insurance plans:

Different Types of Life Insurance:

1. Temporary (Term)
2. Permanent
3. Whole Life Coverage
4. Whole life coverage
5. Universal Life Coverage
6. Endowments
7. Accidental death

Life insurance plans in the market are not anymore constrained on one type of life insurance. Meaning an insurance plan could have temporary life insurance while having an endowment or annuity. Insurance companies now mix the different types of insurances so as to better fit the needs of their consumers and thus make it more attractive to them.

I’m no expert in buying life insurance but I’m very happy with the insurance that I’ve already bought. Below are the basic guidelines that my colleagues and I have used when purchasing life insurance.

1.  You should first decide what kind of insurance you really need.

If your single and you’re not supporting anyone then you might feel you don’t need a permanent life insurance or any life insurance at all. You might think that an endowment plan is the only choice for you.

When choosing an appropriate insurance plan always think ahead. Yes we aren’t fortune-tellers, but we shouldn’t just choose an insurance plan according to our needs now. Our needs change as we get older. Having a goal in life helps us be prepared and be aware for these changing needs.

(I have another article on goals and dreams, which I strongly suggest that you read as it explains the importance of having clear goals and trying to achieve them. It is related to this article as goals help us forecast our future needs. You may read it now or bookmark the link I just provided above.)

What I was just saying earlier is that we shouldn’t just try to meet our needs now but also our possible needs in the future. Life insurance is about securing the future. So think about what your needs would eventually become.

Do you plan to get married? Are you going to be healthy forever? Would you have dependents later on in your life?

 

2.  Select only the top and most stable life insurance companies

This is really important. You don’t want an insurance company that would just disappear after a few years. You don’t want them to disappear at all. You should only select trustworthy and financially strong insurance companies.

Always check the ratings of insurance companies that interest you. What’s better is that you get the ratings of the top insurance companies in your country or area. Ideally what you want are only insurance companies with an AAA or AA rating, but those with BBB ratings might be considerable as well.

 

3.  View the plans of the insurance companies you’ve selected.

The reason you’ve selected first the insurance company before looking at the plans is because you don’t want to be blinded by the more attractive offers of financially unstable insurance companies.

Check the insurance plans being offered in the market by the companies you’ve chosen. Again, don’t check out the plans of the companies you haven’t chosen.

 

4.  Choose the plan that you like best from each insurance company.

This might be tough but choosing only one would make it easy for you on our next step. Make the basis of your decision from step 1, which is deciding what kind insurance you really need.

Compare the plans offered WITHIN each company and then choose the best plan. Don’t compare plans from other companies. Choose one insurance plan from each company.

 

5.  From the plans you selected, choose the BEST plan.

Now that you’ve narrowed your choices to only one per company, it’s time to compare them all with each other. Choose the best plan that suits you. Again use step 1. Try to identify the pros and cons of each plan to make your decision easier.

6.  Review the contract of your chosen insurance plan.

Don’t forget to review the contract of your plan. Make sure that every detail is in the contract. If you have any objections in the contract, don’t hesitate to inform your agent.

 

As I mentioned earlier, buying an insurance plan is a big purchase. Having the right type of insurance plan would actually help you cover financial risks in the future. Having the wrong kind however, would be of little or no help in your future.