What’s the best way to protect your family from financial hardships in the event of your death? You can ensure your family’s future by purchasing life insurance, which is very important because there are many people in your family who depend on you. It is a tool to help people prepare for the unexpected.
Though life insurance is affordable and a significant part of a personal financial plan. Insurance companies promise to pay a beneficiary, the person designated to receive payout after the policyholder’s death. Insurance can be of many types. You can insure any specific type of category like a car, life, health, home, travel, business, property, social and guarantee insurance. Depending upon your requirement you may check relevant policies. Different terms for different categories.
What You Must Know Before Purchasing Life Insurance?
1. Life Events For Getting Life Insurance
Getting Married
When you get married you share each other’s financial obligations. Would your spouse have enough money to keep their current standard of living?
Starting A Family
If something happens to you. Would your children have all the opportunities you dreamed of? Would there be enough money for daycare or tuition fees for university and college?
Starting A Business
Would your business survive if you, or a business partner, passed away?
For that, you must buy life insurance.
2. Life Insurance Main Components
? Death benefit
? The premium
? Cash value
The Death benefit is the amount of money your beneficiaries would receive. Before you die you decide how much you want the death benefit to be at the time that you apply for coverage and insurance company determines whether or not you qualify for that amount
Premium is the amount you pay typically on a monthly, quarterly or annual basis to maintain your coverage. Your insurance company decides what your premium was at the time you apply for coverage based on individual factors such as your age, your health, and your lifestyle.
The third is a cash value that not all policies have a cash value, but if your policy does it gives you some flexibility first, it acts as a kind of account from which you can borrow if necessary, though you should be aware that if the loan is not repaid it will eventually be deducted from the death benefit.
If You Want To Cancel A Policy In Early Life?
Insurance offers options for both temporary and permanent coverage.
? Temporary insurance is best for covering short term needs like paying off debt, a mortgage.
? Permanent insurance is best for addressing long-term needs like burial costs, income replacement or legacy giving an income replacement.
3. You Must Need To Know What Is Universal And Term Insurance?
There are two kinds of policy
? Term policy, one-year renewable or level premium.
? Whole life or universal.
A term policy provides you coverage for a certain period of time. When you buy a one-year renewable you have a certain fee for that year and then next year when you want to renew your next premium gets higher. Premium increases as your age increases. Universal life insurance takes the risk from the insurance company and puts it on you as a client.
4. Insurance Is Not An Investment
Insurance is often wrongly considered as an investment though insurance is a risk coverage tool that provides financial benefits to the family of policy-holders. To take an insurance policy for attractive returns is not a good option. We get less return due to fund management charges and mortality charges. So, you should purchase term insurance and for investment buy mutual funds.
5. Buy Online Policies After Comparing
If your advisor is a trustworthy person then buy from them. The best option is to buy online after comparing all the policies and think which suits you best and for claim settlement purpose online support systems surely assist you.
6. To Take Add-on Or Riders?
Yes, taking a rider can be beneficial. Because a rider is an insurance policy provision, he assists in increasing the scope of an insurance policy or he may change the terms of a basic policy. Riders provide an option of additional coverage and you need to pay if you want to take a ride.
7. Check Claim Settlement Ratio
Before buying you must check it. The more the claim settlement ratio the more effective it is. If this ratio is not good, then after your death, your family may face issues in a settlement.
Life insurance is one of the important considerations of your life. To find less expensive and affordable insurance you need to thoroughly check and compare policies. You must hire a professional advisor who can let you know the pros and cons and take these points in your mind while purchasing life insurance.
I’m a 20-something stay-at-home mother and wife. I have an amazing husband, a beautiful daughter, two loving dogs, and a lazy cat. I wouldn’t change my life for anything! I love to read, listen to music, cook and blog!
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