While life insurance is one thing, which is required by mostly every household and every walking individual on this planet, one cannot just ignore the scepticism that surrounds it. Blame it on the dubious cases of life insurance companies we hear on and off, complexity of the process or mere ignorance of it. In order to avoid such confusion, today, we have enlisted for you 6 such life insurance facts everybody must educate themselves about.
1. If even any one family member relies on you for their financial needs, then you need life insurance: Irrespective of the fact you are a spouse or parent, somebody or the other might be dependent upon you. This fact will remain valid either you are dead or alive. Life insurance can also be used a strategic financial tool, whether or not your dependent family member requires money or not.
2. Life insurance doesn’t mean labelling or putting a value to your life: It actually means being smart and getting covered for inevitable financial consequences, which are a part of loss of life. It can also be a handy tool for your life insurance money received to pay debts, mortgages, pay for their education or simply help in regular day-to-day expenses. All in all, if not anything, it can totally lessen the financial burden of a family after losing a loved one.
3. There are many types of life insurance and one needs to be smart enough to decipher which one is best suited for them: With the advancement in both private and public companies offering insurance plans, there’s a high variety of insurances available out there. Some of them are:
• Life term insurance
• Guaranteed income plan insurance
• Endowment insurance plan
• Child plans
• Whole life insurance plans
• Unit-linked insurance plans
• Pension plans
Now, whether you are beginning to search for whole life insurance companies or simply want to customise a money back plan according to your income and needs; make sure that you always go for companies that give you a tax advantaged asset and comes from a reliable source.
4. If you are buying the life insurance for the first time, then never consider insurance as an investment: This a pivotal step while considering to buy any type of life insurance. While there are many life insurance plans that tend to double up as investment, one needs to keep in mind that nothing else apart from coverage amount matters. Insurance means getting the protection, something that helps your family at the time you won’t be around. Hence, atleast the first life insurance you are buying for yourself should never be evaluated based on its returns and bonuses. Consider life insurance policy as a risk management tool and you shall do just fine.
5. Deciding the policy tenure shouldn’t be tricky: While the kind of insurance you go for will decide your policy tenure, the best way to decide the same is to keep in mind your earning age. If you ae most likely to earn till 60-65 years age, then you need to keep the policy term for that long.
6. Always know what happens if you cancel an existing life insurance policy: This is imperative as you wouldn’t want to leave any kind of coverage or money on the table. If you think, you in all probability have got a better deal and wouldn’t want to continue with the existing one, then you need to be ultra -careful. Make sure to never cancel a supposedly wrong policy, till the time you don’t get the right policy in hand. If it is a money-back guarantee plan, then do consider how it will affect your future investment value and if there’s any prospective tax complication.
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