The inevitability of death is the only certainty of life. With that in mind, one of the steps you can take to protect your loved ones is to purchase life insurance. Now, even the basic ideas related to life insurance are still not clear to many people. It also explains why being under-insured is a major issue in India. On that note, here’s answering the three most important questions related to life insurance.
What exactly is life insurance?
A life insurance policy is an agreement between a policyholder and an insurance company whereby the latter agrees to pay a certain amount after the death of the policyholder. The amount that is paid after the policyholder’s demise, also known as the death benefit, goes to the chosen beneficiary of the policyholder, as per the insurance documents. The idea is to offer financial support to the loved ones even after the demise of a loved one.
Life insurance policies can be primarily categorized into two types – term and whole. As is evident by the name, the whole life insurance policy covers you for life, provided you pay the premiums on time.
On the other hand, term plans offer protection for a particular time-period, say twenty or thirty years. You can choose for how long you want the coverage. Most insurance companies let you renew the term policy after it reaches the expiry date. Out of these two types, the premiums are cheaper for term insurance.
What is the right age to get life insurance?
There is no denying that a good time to get life insurance is when you are young. After all, you are typically at your healthiest when you are young, which also helps you attract a lower premium. However, this does not mean that you cannot get a life insurance policy when you are forty or even more.
Getting a life insurance policy at a later date has its own set of reasons and perks. For instance, as you start a family, you also start attracting EMIs for a lot of different things. Maybe you have a car loan or a home loan to pay off. If anything happens to you, at least there is assurance that the burden of debt will not fall upon your dependents.
Do you need life insurance?
The short answer to this is anyone who has dependents needs a life insurance policy. Maybe you are single but your parents are financially dependent on you. Or, when you get married, you will have your spouse and kids as your dependents. Life insurance is a way to offer them financial protection in your absence. Insurance policies are particularly important for anyone who is a primary provider for their family.
In fact, individuals might even need insurance when they do not have dependents. For instance, one might need insurance to cover the expenses after their death, such as attorney fees, funeral, and so on.
That’s all for now! Talk to your bank and find out an appropriate insurance cover for you right away.