Mini Guide To Life Insurance

There are so many different choices for buying life insurance. Deciding the best insurance policy that suits our requirements helps us to shield ourselves from things that we just don't want to happen: the consequences on our families or loved ones after any unfortunate event. Life insurance is also the top option for those who choose to fulfil the financial commitments that are essential while raising a family.

What is Life Insurance ?

Life insurance is an agreement between an insurance provider and life assured in which you choose to pay a premium in exchange for the sum assured to the beneficiary. The money that the insurance provider agrees to pay is known as the death benefit and the beneficiary is the person who receives the payout on the demise of the policyholder. 

Why Should One Get Life Insurance ?

There are many reasons why you should go for a life insurance plan. A few of the reasons are given below.

1. Financial Stability

One of the primary benefits of a life insurance plan is financial stability which it offers to your loved ones in case of your untimely demise. In times of emotional grief, the least that a life insurance plan can do is take care of all the financial requirements of your family.

2. Peace of Mind

When you have a life insurance policy, you can enjoy a substantial amount of peace of mind as you need not worry about the financial standing of your family and loved ones in case of your unfortunate death.

3. Wealth Creation

When you invest in a ULIP or a savings plan, your premiums get invested in a fund of your choice which offers you market-linked returns, thereby appreciating your wealth.

4. Loan Facility

Some life insurance policies offer an additional loan facility. By exercising this option, you can avail a loan of up to 80% of the surrender value of your fund to meet unplanned financial emergencies. The duration of the loan varies from plan to plan. The interest rate paid on this loan and the options for redemption of the loan also differ across insurers.

5. Permanent and Total Disability Cover

You can extend the coverage of your life insurance plan with the help of optional riders such as Accidental Permanent and Total Disability cover. When you opt for this rider, the insurance company provides you with a monthly income benefit in case you are unable to earn a living due to a disability.

6. Critical Illness Cover

Some life insurance plans offer an in-built cover for critical illnesses, while others offer an optional critical illness cover to help you meet urgent financial requirements in case you get terminally ill.

How Much Life Insurance Does One Need ?

Since people purchase life insurance for a number of reasons, how much you need will depend on why you buy it. If you're trying to guarantee your family's financial well-being, you'll need to look at different personal considerations to help you find out how much you need.

1. Standard of Living

The money you receive from the insurance can act as a sense of relief and comfort to ensure that your loved ones goals are not affected and they continue to live the way they are used to living with no change in their quality of life.

2. Secure Your Child's Future

Life insurance can give your child the best and hassle free education even in your absence so that your child can pursue his/her dreams.

3. Retirement Planning

Retirement is where you're free from job strain. Most of us work in private sector businesses, where there is no pension benefit. That's why retirement is more of a concern than anything to look forward to.

4. Premium Payment Capacity

One should always check their current regular source of income and then accordingly plan the life insurance policy that gives them the most desirable premium rate.

Conclusion

Life insurance, while mostly used as a mechanism for financial planning, can also serve a wide variety of needs for dependents. With a number of life insurance plans available, both offline and online, it is important to pick the best life insurance policy with the right amount of benefits.