When we talk about a life insurance policy, it is a contract between you and a life insurance company. Life insurance, therefore, is a binding agreement between the insurance company and the insured holder of the policy. It works as you pay monthly or yearly premiums in exchange for a lump sum amount of money as financial assistance to your beneficiaries upon your death.
The beneficiaries are the people who receive the money after the insurance policyholder dies, and they are free to use the money for whatever purpose.
Personalizing a life insurance policy is vital to help you find an insurance plan that best works for you and your beneficiaries.
To help you, here are ways to personalize your life insurance policy.
- Customize The Beneficiaries
It is a crucial part when considering a life insurance policy as the beneficiaries are the ones who will be in control of the financial benefit left behind. The traditional form of customizing the beneficiaries is where the life insurance policyholder appoints his spouse as the first holder then the children will serve as the contingent benefit holders.
However, this serves as a challenge as sometimes the policyholder’s family may not handle such a large amount of money responsibly. A blended family could also be a deciding factor that’s why sometimes, the policyholder instead enlists other relevant people in their lives or even their businesses that will be in charge of the financial benefits. There are approaches to use when customizing the beneficiaries. These are the following:
- Per stirpes – it states that if a beneficiary is deceased, the share of the financial assets will be divided evenly among his descendants.
- The per capita – this approach refers to the financial assets divided among the named beneficiary, and if that person is dead, he won’t receive anything nor his descendants. Hence, the other named beneficiaries will have added benefits.
Choose Convertible Policy Options
When personalizing your life insurance policy, you should be aware of the types of policies available for you. Is the policy convertible? Life insurance is considered relatively cheap, but it only covers one for a certain period. On the other hand, whole life insurance covers an individual till death. As it is permanent, it accrues cash over time.
Also, universal life insurance is flexible as one can use it to convert retirement policy to whole life insurance. It is also a permanent type of policy.
- Accommodating Riders
Riders refer to supplementary policies added to the life insurance plan for the holder’s benefit through upgrading the insurance coverage. It involves expanding the financial worth of assets and enabling the holder to qualify for huge refunds. Riders can be categorized as follows:
- Accidental death benefit allows the policyholder’s family to receive the financial assets in his unexpected death.
- Return of premium waiver means that if the policyholder cannot continue to pay for the stipulated amount of premiums as expected, all the charges are refundable through the rider option.
- Increased death benefit for terminal illness allows the policyholder to enjoy parts of his financial assets before kicking the bucket.
- Payor rider benefit allows the policyholder’s children to enjoy the benefits of the life insurance if the policyholder becomes severely injured or dies before the expected maturity period of the policy.
- Disability rider income applies if the policyholder suffers a disability, he can still enjoy the benefits.
- Unemployment waiver costs benefit the holder if he is rendered jobless and is unable to pay the insurance premiums can be waivered.
- Companion rider benefit enables the spouse to the policyholder to take the financial benefits.
- Monthly disability income benefits the policyholder’s family to receive monthly upkeep if the holder becomes disabled.
- Primary cost rider enables the rider to purchase and accumulate coverage with the rising cost of living.
- Consider Value Options In Terms Of Cash
It implies the total of what the policyholder has in the form of money that the insurance company holds, and they can access their money when they need it. It can be in the form of loans.
Finally, you can term life insurance policy to be very beneficial. Understanding the benefits with its maturity time is advantageous to the policyholder and his family. Moreover, customizing your life insurance policy is crucial to finding the best plan for you and the benefits it will give your family in case of your death. Therefore, personalization has to be done critically with the preferred insurance company that allows you to do so.