How to choose a Life Insurance
What we have seen throughout this series of articles on life insurance reflects its importance for individual and family well-being and for the correct management of individual risk:
Therefore, it is necessary to understand how to choose the best life insurance.
One of the most important factors in the policyholder's logic is the price factor (premium). But we shouldn't choose just for the price. This factor is important, of course, but we have to carefully analyze the coverage and the defined capital in the event of death, illness or disability so that the comparison is possible.
Buying cheap can mean less coverage and less protection in the future.
It is essential to analyze several proposals from different insurers and consult the ASF website to see if the insurers are properly authorized and sound according to the defined metrics. We should also analyze the impact of the prize on our financial plan. Sometimes the capital required is higher, but we have to opt for a lower capital in order to support the insurance premium. These are difficult decisions, but they should always be considered. The possibility of changing the value of capital based on our financial situation can be an interesting way of mitigating this risk.
In order to be able to adjust the coverage and the value of the capital, it is necessary that the insurance policy allows making these changes. Therefore, we must always check whether the insurance allows us to change these conditions throughout the contract.
The payment method can also help in decision making. Payment of the prize in installments may represent an increase in the annual value of the premium. The possibility of paying by direct debit can also change the premium amount.
Finally, we reinforce the importance of knowing the required capital, that is, the amount to be paid by the insurer at the time the insurance is activated, at the time the accident occurs (death, illness or disability). To make this calculation, it is necessary to know, for example, our standard of living (annual expenses), the composition of the household and age, our goals and the existence or not of credits such as mortgages (contact us for more information). Basically, it is the value that, without our presence, will allow our family to continue to have a normal life and to fulfill the defined plan regarding, for example, education, housing, health, transport, food, among others.
Life insurance is a key part of a complete financial plan. That's why we developed a partnership with Mudey, a technology startup in the insurance sector; an innovative insurtech so that we can offer Future Proof customers this important service. The partnership that Future Proof and Mudey entered into will allow Future Proof's investors and customers to have access to a very complete offer of life insurance and a complete monitoring of the insurance portfolio.
Vítor is a CFA® charterholder, entrepreneur, music lover and with a dream of building a true investment and financial planning ecosystem at the service of families and organizations.