What is a life insurance plan?
Every one of us, love their families and wish for their secure future. No person in this world will ever wish that his or her children have to stop going to school or the whole family faces some kind of financial setbacks or disappointments by their sudden demise. Everyone will wish that their family runs the same way as they have been running while they were there with their family. A life insurance policy is just the way to make such wishes of every family person come true.
In case you don’t know, what a life insurance policy is, let’s start by explain the same. Life insurance is an insurance scheme provided by a company in exchange of premiums that are to be deposited at a particular time every year. It ensures the future of a family in absence of a family member whose demise may cause financial instability in the family household. It may be to meet the regular requirements of the family such as household requirements, financial support for education purposes, and other goals and requirements of the person or the family. The life insurance benefits are income tax free.
Different plans in life insurance policy
After knowing what a life insurance policy is you should also be aware of the different types of life insurance policies that a company may offer you before you select a life insurance policy for yourself.
Term Life Insurance– This is a kind of life insurance that is only applicable for a fixed period of time. If the insured person dies within that length of time, the company pays his or her family (also known as the beneficiaries) an amount as a death benefit. There are a few things you should know about term life insurance. Term life insurance is the least expensive method of getting a life insurance. The premiums are fixed. Suppose you have a term life insurance of 20 years you have to pay the same amount regularly for the entire duration of 20 years or for a fixed no. of years like 10 or 15 or just one time depending upon the options available. The premiums depend upon the coverage, the term or period the life insurance is valid for. Longer the coverage term, higher the premium amount. The insurance also depends on the death benefit, your beneficiaries will receive that is the money they will receive in case of your death. Higher the benefits, higher will be the premium. This is the most common life insurance policy preferred by people as it is highly customizable and can be adjusted to the financial conditions of most families.
Whole Life Insurance- This is a kind of insurance where the beneficiary gets death benefits on the death of the insured person, life cover is available throughout the life, provided the premiums are paid and other conditions are met. This is a permanent life insurance where the premiums remain fixed and do not increase with your age. Usually, the person has to pay for his whole life till his death or till the age of maturity of the premium that is at the age of 100 or for a fixed period like 30 to 40 year or till he reaches the retirement age, whichever comes first. Here also the premium rates depend upon the death benefit the insurer’s family is going to receive after his death.
How to choose an ideal life insurance?
Before choosing a life insurance, you should get more information here.
- You should multiply your current income by 15 or 20 and you will get the approximate amount for your life insurance as death benefit.
- You should keep in mind about the educational factors of schools or colleges of the younger ones in your family.
- You should consider the health and ailment factors of the members in your family. Your insurance should cover their expenses for medicines, treatments, checkups, etc.
- You should consider your credits and liabilities such as loans, EMIs, etc.
- You should also take into account, your family lifestyle before choosing a life insurance policy.
- An average annual inflation of 7-8% should also be taken into consideration.
All these things are to be considered before choosing a life insurance policy. Hence, a policy that meets your need and requirement is actually ideal life insurance policy for you.