What is Life insurance?
Life insurance acts as a pillar in your life, in my every post on life insurance I always mentioned how important life insurance is. But still what I find in people’s mind is great confusion, when and how to buy life insurance and at what rate, if you have full knowledge about the pros and cons of the life insurance you can very easily buy the right life insurance without any hustle.
Today in this article I will provide you all the information regarding life insurance in a more detailed manner. Let’s study the main key points about Life Insurance step by step:-
- Somebody relies on you? Then at once you should go for Life insurance
It’s mandatory if you got kids or you are spouse or ex-spouse if your children’s or wife is dependent on you. If you are a retired employee and financially dependent then you need immediate life insurance and if you are financially blessed then you don’t need a life insurance plan but still, for financial security, you can avail life insurance plan.
- Life insurance is also known as ‘A Policy’
A policy means a contract which is between the life insurance company and the insurer who wants to save someone’s livelihood when they will not be there. The company gives death benefits in such cases and how company earns is by the premiums coming in and the claim which is paid out, the final difference is the company’s profit.
- Two types of insurances: Term Life insurance and Permanent life insurance
What do you mean by term life insurance?
Term life insurance is the insurance which is an affordable, simple and healthy plan for an insurer. This is the policy which works on the insurer statement if he terms that he/she will die in 20, 30 or 50 years. Then the premium is guaranteed and accepted by the company and even given if the person dies. If the policy period lapses then on whole you are not going to, get anything but on the other hand, you are blessed with a beautiful long journey life.
If we talk about permanent life insurance, then the whole procedure is the same, the only difference is the savings. The Insurance Company gives you the “cash value” as a gift.
- Life insurance can be expensive like anything and cheapest like you are expecting
If you are applying for the life insurance policy, then you are on the right track but before that, all the medical tests are done so as to look that whether your body is ok or not ok.
Many things might be cleared in your mind. If you are a non-smoker person then your plan will be low if you compare it with a person who is a chain-smoker or suffering from any kind of disease of disability the amount of insurance will be very expensive than your expectations and if you are fit and fine then it will cost you a less amount monthly or annually.
- Use the online calculator for Calculating the life insurance plan
Do you have any idea about the plans on which you can save massive, there are many insurance plans available for you. Just analyze your requirements that how much insurance do you actually need and calculate with the online tool which will give to the exact amount of insurance and this will help you the same for your family.
- Remember, life insurance is not an investment
Never, look life insurance as an investment you have not invested that money which will grow and will help you in your financial problem, that’s the money for the people who are dependent on you. There are other platforms through which you can make money by investing a specific amount of cash value or make emergency funds which you can utilize in the future for yourself and your family.
- Are you shopping for lower rates?
The best way to get a cheap and fast deal is to shop around for the best. According to the professor Patricia Born, shopping for individual life insurance is very easy and switching to a new plan is also easy it’s not that tough which people think nowadays you can get the quote online after comparing with your current plan. There are many sites in which this facility is available where you just need to input some of your information and feel free to have a policy of your choice.
According to an insurance group Limra half of the people don’t have the coverage which they qualify for only 70 percent of the Americans have proper life insurance. Price is the factor which do create a problem in choosing the life insurance policy, people do avoid the paperwork and other formalities they prefer life insurance through online rather than calling a broker or run here and there by themselves which is no doubt a very tedious task to do.
- Know the right way to calculate the life insurance plan, at the time of purchase of the Life insurance
Income Replacement Value
This is one of the basic methods of insurance calculation and is based on your current annual income.
Insurance needs = annual income * the number of years left for retirement.
Let’s say your annual income is Rs 5,00,000. And you are 45 years old with 15 more years of retirement.
In this case your insurance cover equals Rs 5,00,000 * 15 = Rs 75,00,000.
Another way in which income replacement works is to multiply the annual income by 10.
- Difference between insured and insurer
The person whom you name as the nominee is the one who will get the insured amount if you die. The nominee is referred to as the beneficiary. On the other hand, The person in whose name the insurance policy is made is referred to as the policy holder or the insured. So, if you have taken an insurance policy, you are the policy holder, the one who is insured. This is the major difference between these two confusing terms in the life insurance.
- Always Consider using online method for purchasing the life insurance plan
There are many ways to purchase the life insurance, you can go directly to the agent or the agent will come at your place to tell everything about the life insurance plan. But, here I will suggest you get an online quote for life insurance without any hustle you will get a number of plans on your screen and you are free to choose the plan according to your budget and needs. If you are planning to get life insurance through a live agent, then keeping all the records and files in writing is really a tedious task to perform.