Death is inevitable, but you can certainly try making your legacy a lot more prestigious and glorious. Ensuring a reliable and safer financial future for your loved ones is the most persistent thing you can leave to cover your absence.
Life insurance is a great financial tool that acts as a contract between you and the provider, specifying one of your desired nominees to receive an assured sum of money after your demise. It’s an extremely important financial investment, especially in a country like India.
The moment you decide to take life insurance, you’re preparing for the future of your family after you can no longer be with them. Therefore, it’s certainly necessary to make sure you know a thing or two before you sign the contract, to make sure you get the most out of it.
The Perfect Time to Get A Life Insurance
There’s a high chance your reason to purchase a life insurance policy will resonate with why you want to gain a cover. Here’s a list of some situations that may become lenient with a life insurance cover soon.
- Having Kids
It’s no wonder that parenting a child can be one of your most exhausting financial days. Life insurance ensures a consistent payroll that makes sure your heirs can fulfill the needs of their life after you’re deceased.
- Purchasing a House
The majority of Indian families rely on home loans to have a shed over them. Various types of life insurance policies provide financial benefits, you can make sure your family is capable of paying off the mortgage in case of an unprecedented incident.
- Funeral Expenses
If your family is self-reliant and capable of managing the expenses after your absence, your policy cover can still help them with a lump sum amount to help them cover the costs incurred during your funeral, and prevent them from having a sudden financial burden.
- Building your Legacy
Everyone wants people to know them even after they leave them forever. With the help of a policy, you can make sure that you can offer an inheritance to your family after you can no longer support them, and help them through their life.
What’s the Ideal Cover?
As a general rule of thumb, the higher protection you take for your policy, the more premiums you need to pay while you’re alive. It’s certainly worth knowing how to calculate your premiums and determine the financial requirements of your family after your demise.
Let’s understand this with an example – if you’re looking to offer a regular income to your family after your death, you need to pay attention to your family’s current expenses and compare it with the possible inflation in the future to determine a rough figure.
On the other hand, if you’re a person living in his fifties, and looking at life insurance as a way to make an inheritance, you must make sure that you can pay your premiums because you might be retired and might no longer have any income source.
What Should Be the Perfect Deadline of Your Policy?
When you purchase an insurance policy, it’s you who determines how long it lasts. Whether you want it to end after a fixed period or make it last until your final breath, you’re the one who determines this after assessing your requirements.
Moreover, it again depends on your reason to purchase life insurance. If you’re looking to help your family with mortgage expenses that may likely last as long as 25 years, you should purchase a lifelong insurance policy to help your family cover their expenses.
Although term insurance offers several benefits, the worst demerit is when you live even after the deadline of your policy, you won’t be able to gain any payout or financial benefit because that’s how this policy works. It’s better to look at other variants based on your requirements.
Do You Need to Modify Insurance Level with Time?
If you want to help your family be capable of paying off your mortgages, your monthly repayments will make the amount you owe fall with time. With that said, the loan also reduces the scale of your life cover gradually as you make repayments.
Popularly known as decreasing term insurance, this policy variant provides lower premiums as compared to level term insurance that tends to remain the same throughout the term of your policy until it dies.
Covering Your Partner – What You Need To Know?
It’s said that the main expense holder of the family should consider taking a life insurance cover. However, if your partner doesn’t work or produces less income, their death could lead to a major financial impact on your surviving members.
Additionally, you also need to keep domestic expenses and costs involved in child care if you are a parent. If you’re still convinced about getting your partner covered, you can consider choosing joint life insurance that provides a single payout after either of the partner’s death and the policy dies.
Moreover, you can also purchase separate policies that will pay out after the individual death of both partners and provides a greater level of security for your family. However, it can get pretty expensive, especially if your work doesn’t pay a good amount.
Factors Affecting the Policy
Depending on the age of your policy and the scope of its cover, there can be several factors that may affect the features of your policy such as the premium amount. Here’s a list of factors that might have an impact on your policy:
- Your Health and Well-Being
- Your Living Standards and Daily Expenses
- Your Current Age
- Your Family Medical Conditions and History
Apart from the above-stated reasons, if you have any hazardous hobbies or jobs, you may see a significant difference in the size of your premiums. People with jobs like flying a plane usually see a hike in their premium prices.
Purchasing a life insurance policy is a significant decision of your life, and you need to make sure that you know the how’s and why’s of these policies to make the most out of it. Hopefully, this guide may have cleared all your basic concepts.