There are a number of things potential buyers have to consider before getting any type of life insurance product. Purchasing insurance – for the 1st time – can be quite a daunting job. With a really wide range of products currently available, and so many firms offering different types of cover, it can be difficult to know where to start. Before you start searching through countless policies therefore, it’s good to become acquainted with the general types of products in the marketplace, as well as to establish an idea of the kind of policy you’ll ultimately like to secure for yourself. You must consult with a licensed agent in your state so that you can determine how much protection you need and can pay for.
You need to consider whether you want to purchase level term or decreasing term life insurance. In case you simply like to cover a repayment mortgage then decreasing term life insurance is cheaper and could well be adequate. If however, you have dependents, then a level term insurance policy may provide greater reassurance since you can be assured your beneficiaries will receive the full sum assured.
The insurance provider makes its decision on your insurability based on very basic criteria. That is gender, age, the amount assured as well as the policy term. As such, they have to make certain assumptions with regards to you. Namely, that you are in good health for your age and do not have a family history of ill-heath; that you do not have a risky work; and that you do not do any kind of hazardous activities. If the previously mentioned assumptions are correct, then it’s very likely that your insurance application is going to be accepted on what’s referred to as “standard terms”. Nevertheless, if you do belong to one of the above categories then your application for life insurance will be referred to their underwriters whose task is to assess what risk you represent to them and thus, what premium they need to charge.
All life insurance policies will pay their stated death benefits in the case of accidental death. However if you have decided to purchase (often for an additional fee), an Accidental Death Rider, the life insurance policy will pay a lot more than the death benefit, sometimes two or three times the amount. This is sometimes known as “double indemnity” insurance.
The life insurance riders also are sometimes offered as separate polices known as Accidental Death and Dismemberment insurance, or AD&D. For the purpose of such life insurance riders, an accidental death is defined as a death that is neither purposely caused by a human being, such as a homicide or suicide, nor the result of natural causes such as cancer or cardiovascular disease. There are often other limitations on accidental and dismemberment benefits, which includes but not limited to death in a surgical treatment, or from a bacterial infection, hernia, or a drug overdose. Moreover, most AD&D policies or riders don’t cover risky activities like skydiving and also car racing.
