5 Important Things You Must Know About Life Insurance
Created On: 9/16/2019 6:30:00 PM
Life Insurance Premium
A few of the vital ingredients of life are sometimes quite complex to fathom. Life Insurance is one among such. It is at once a pillar of one’s financial planning but at the same time is a quirky ‘concept’. Great care and due diligence are to be observed before picking up the right Life Insurance Policy for self, as well as your dependents if any. It is a great financial tool if properly utilized as it is both a “savings instrument for short term needs” as well as for providing long term financial stability to the insurer and family.
As such it becomes imperative to “read between the lines” before zeroing in on the apt Life Insurance Cover/Policy. One needs to be armed with proper information to simplify decision making in the best interests of self and family. Please read on to know the 5 important things you must know about Life Insurance.
- First and foremost, you should know that Life Insurance is broadly categorized into two types– Term and Permanent. Term Life Insurance, as the name suggests, is for a fixed period of time- calculated on the possibility that the insurer will die within a stated term of 10, 20 or 30 years. The premium needs to be paid for such a term after which a pre-determined “maturity value” is paid to the insurer or his/her survivor in case of the death of the insurer. On the other hand, Permanent insurance is literally life- long with a saving mechanism built into it. This type of policy cover is more complex and expensive but is proven to be ideal and at times, the only solution for complex business planning.
- As insurance is a “contract” between the insurer and the issuing company, the insurer must refrain from indulging in adventurous deeds when a decision is made to purchase life insurance. This is because any untoward injury or harm to the health of the insurer will result in the insurer paying unduly high premiums for the policy. It is advisable that all pre-existing medical conditions be declared to arrive at the right plan and an affordable policy.
- Multiple life insurance policies can be bought by the same person, unlike home or travel insurance. It becomes advantageous to take more than one insurance policy for life as it will act as a hedge against rejections of claims. Also, subscribers who bought life insurance might later realize that they need more coverage after major life events like marriage or child’s birth. These kinds of situations necessitate buying additional insurance policies.
- Buying life insurance is not an end itself. It needs to be serviced periodically, depending upon the policy chosen. Premiums may have to be paid quarterly, half-yearly or yearly, or in some cases even monthly. Regular default in paying premiums might possibly result in cancellation of the policy which affects your financial planning adversely. Consumers must evaluate their paying capacity before finalizing the purchase of insurance.
- Educate and inform your nominees – typically spouse and or children- about your decision to purchase a suitable life insurance policy. Maybe they have a better plan in mind which you happened to have overlooked or are unaware of. Avoid haste and take an informed decision when it comes to the issue of buying Life Insurance.