Everything You Need To Know About Life Insurance

By | September 30, 2018

Want to invest in a Life Insurance plan? Here’s all you should know.

No matter how convinced you are with the idea of getting Life Insurance, by the time you finish reading this article, you’ll have more than sufficient knowledge to invest in a Life Insurance plan (if you haven’t done that already).

Additional Reading: Everything You Need To Know About LIC

In this article, we’ll cover the basics of Life Insurance and why investing in it is an absolute must. Let’s begin.

Why Is Life Insurance Important?

Life is full of surprises and not all of them are worth looking forward to. If you are the sole breadwinner in the family, it becomes all the more crucial for you to think about the future needs of your family in case of your untimely death. This is where Life Insurance comes to the rescue.

What Are The Types?

Life Insurance plans have two basic types—Term Life Insurance and Permanent Life Insurance. As the name suggests, a Term Life Insurance plan covers you for a specific time. You can specify the coverage amount while signing up for the policy. In case of an unfortunate event, the face value of your policy is paid to your beneficiaries as a death benefit.

Additional Reading: FAQs On Life Insurance

In case of a Permanent Life Insurance policy, you get a life-long cover. Just like a Term Insurance plan, your beneficiaries receive the face value of your policy as a death benefit. Additionally, they also get an accumulating cash value.

What Type Of Coverage Does Life Insurance Offer?

Life Insurance plans can be very flexible, but here are the major types of coverage offered.

  • Retirement planning: If you customise your Life Insurance plan well, you can get it to cover all your living costs post retirement.
  • Cost of living: In the unfortunate case of your death, your Life Insurance plan can cover all your family’s basic expenses like your child’s tuition fee, your outstanding debts etc.
  • Business expenses: Buying the right Life Insurance and getting it customised properly can help protect your business in case something unfortunate happens to you.

How Much Life Insurance Should You Opt For?

Trying to make an accurate estimate might not be possible, but getting a fair idea and converting that into a ballpark figure is doable. To do that, you need to first analyse your lifestyle and understand your needs. Don’t forget to calculate what all your family is dependent on you for. This might include a lot of things, especially if you are the only breadwinner. Things like your child’s tuition fee, various mortgages, Health Insurance policy premiums, daily expenses like groceries, child care and home maintenance must be considered.

Also, while doing these calculations, don’t forget to include money spent on entertainment and other personal expenses. Once you have arrived at an approximate annual amount for all these things, it’ll be easier for you to estimate the Life Insurance cover you need.

Additional Reading: 4 Extremely Important Reasons Why Women Need Life Insurance

When Is The Right Time To Buy A Life Insurance Policy?

Since the cost of the premium to be paid keeps increasing with age, it’s wiser to get the right Life Insurance plan as soon as you start earning. Since you are young then, it’s easier to get a better deal with customisation since the chances of you having health complications are low. You might also need to think about opting for a more comprehensive Life Insurance plan in case of special situations like starting a family/new business, getting married etc.

Additional Reading: Common Exclusions Of Life Insurance That You Should Know About

Who Should Be Your Beneficiary And What’s Their Importance?

Someone who will get all the proceeds of your Life Insurance policy (as chosen by you) is the beneficiary of your Life Insurance policy. Depending on whom you want this benefit to go to, you can make a choice. In case you fail to mention the beneficiary while taking a policy, the proceeds will be distributed according to the Life Insurance issuer’s contract in the unlikely event of your death. In most cases, it ends up going to your family members (children, spouse etc.). While choosing a beneficiary for your Life Insurance policy, think of the future and all the possibilities. Plus, you have the option of updating your beneficiary.

Got everything you need to know about Life Insurance? It’s now time to get the right policy.

Explore Life Insurance

 

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Category: Insurance Life Insurance

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