People are now starting to understand the importance of insurance. The corona virus epidemic has a big hand in this. This sudden disease destroyed many families. If the earning person dies in the family, then the whole family falls apart. In such a situation, insurance prevents the family from disintegrating.
Through this article, I have tried to answer 6 such questions related to life insurance, which often keep running in people’s mind.
1. What is the purpose of taking life insurance and who should buy the policy?
Basically life insurance covers your life goals with the objective of protection, savings, investment and health. It gives you financial freedom so that you can successfully achieve your future goals in life.
Life insurance is a financial security cover for the family in the event of the death of the person. It helps in providing protection against financial crisis arising out of events like disability or death.
2. When should one buy life insurance and what should be kept in mind while choosing the right policy?
My advice is that whenever someone starts his first job, he should take a life insurance plan soon. Apart from the safety aspect, insurance also inculcates the habit of saving from an early age, which is very important for financial discipline in the long run. Many factors are important in the decision making process.
Insurance should be included in the overall financial plan. Before choosing the right product for you, look at the life goals for which you are planning and then look at the various products that come under your income bracket. Unless your insurance is aligned with the financial goal, you will not be able to choose the right product for you.
3. What are the Different Types of Life Insurance Products?
Life insurance offers various solutions to meet different life goals. Key protection products like term insurance and critical illness solutions provide you financial protection against events like death or diagnosis of critical illnesses.
There are also endowments and market-linked products in the market to raise funds, which help people not only save money, but also increase wealth for their long-term goals like children’s education etc.
Income Solutions is a great way to create an alternative or alternate source of income for all age groups. Similarly, pension and annuity products are a great option for retirement planning.
4. Do I need a term insurance policy? How to calculate adequate coverage for yourself?
Term insurance is a pure form of protection and people on whom family members are financially dependent must opt for it. To buy a term insurance plan, there are many things to consider which include income, expenses, liabilities, inflation rate etc.
There are many ways online in today’s time, through which you can calculate the adequate coverage for yourself, according to your particular needs.
It is an empirical rule that the life insurance cover should be equal to 10 times the current income of the individual and the liability should also be included in this so that the alternative source of income can be created in a precise manner. As your responsibilities increase, your insurance cover should also increase.
5. What precautions should I take to ensure that my dependents get all the desired benefits?
A life insurance policy is a promise that is fulfilled in your absence at a later date. It is very important that you give your insurer all the necessary details.
Information about your income, education, profession, health (pre-existing diseases), family history, habits like smoking and drinking should be given openly. If all the facts are disclosed truthfully at the time of buying the policy, then there is an increased chance that your dependents can get a hassle-free claim.
6. What are the things to keep in mind while choosing an insurance company?
It is important to choose the right insurance company for you. But it is more important that you choose the right product for you. First of all, shortlist the product that you want to buy and then determine whether the offering company is fundamentally strong or not.
Important factors such as claim settlement ratio (settlement ratio), return on funds managed by the company, IRR, charges on the product, bonuses declared earlier and performance of the company should be considered.
I leave you with this last thought – don’t blindly follow the recommendation of a friend or relative. Let them help you, but make sure the decision you make is based on your own research, need and understanding.