Life insurance is a means of protecting your loved ones from unforeseen financial difficulties if something should happen to you. In essence, it provides financial security for your family in the event of your untimely demise.
Your family’s long-term financial needs and objectives determine coverage requirements. For example, this page explains the difference between term and permanent life insurance policies. And here are several quick-reference items to consider before choosing a life insurance policy:
Investment alternative
Insurance is a crucial part of your long-term financial planning. However, some policyholders also consider it as an investment. This is because whole life policies offer a return on maturity.
Coverage amount
Your priorities and your lifestyle play a crucial role in determining your coverage value. Alongside your liabilities, you must also consider your immediate needs, inflation, and living standard. It will help you to also identify the coverage value that’s sufficient to sustain your household financially if you die prematurely.
Policy tenure
You must consider the length of your earning years when choosing the tenure of your life insurance policy. For example, it is usually not worth to carry coverage beyond the age when the last of your children have left the nest and are supporting themselves.
Coverage options
A term insurance premiums are typically less expensive than whole life plans because, unlike whole life plans, a term plan doesn’t yield any maturity benefit. Term plans are your best option when you want a high coverage for a low premium.
Claim procedure
In order to ensure any claim is executed as quickly as possible, be sure you understand the claim procedure so you can explain it to your beneficiary.
Death and maturity benefits
Life insurance policies can have two separate components: the death benefit and the maturity benefit. The death benefit is a lump sum payment made to the beneficiaries of a plan when the policyholder passes away within the tenure of the policy. Whole life policies also offer a maturity benefit; this is the amount paid to the policyholder when the policy matures.
Conclusion
Consider life insurance to be a good friend that stands by you throughout your life. Remember, the primary objective of any insurance policy is to offset any financial difficulties that would otherwise be experienced by your family in your absence.
Photo Credit: Steve Snodgrass
