What many people often don’t consider is the financial cost of emergencies. Facing an unpredictable situation requires you to be mentally prepared, but it also helps if you are financially secure. This is especially true if something were to happen to you and your family relies mainly on you, financially and otherwise.
When you start earning, your focus may be on saving and building a financial net sufficient enough to help your family in your absence. However, your savings may not suffice. Putting a part of your money in life insurance plans has some benefits. It would be helpful to get a life cover, if you want to keep worries about your family’s future at bay. If you are planning to buy one, it is best to have all your questions answered beforehand. Keep reading to know more about such questions and get your doubts cleared.
Understanding life insurance
What is life insurance? A life insurance policy is known to be an agreement between the policyholder and the insurer. If the policyholder were to pass away during the term of the policy, the insurer will financially compensate the nominee of the policyholder. The sum assured given under the policy can help the family manage the cost of living and plan for the future as well. Some life insurance policies may offer the option of investment and maturity benefits.
Frequently asked questions
Listed below are a few frequently asked questions related to life insurance plans.
- Is life insurance too costly?
Some people tend to bear the idea that a life insurance policy costs a lot. That, however, is dependent on the type of policy you are opting for and when you buy it. For example, if you purchase the policy at a younger age, the costs could be relatively lower. On the other hand, going for a late purchase of the policy could lead to price escalation. Also, there are different types of policies that have different benefits. It is better to understand your requirements and select the policy accordingly.
- Will my group life insurance policy be sufficient?
While it is true that many offices offer group insurance policy to their employees, relying solely on its cover could be risky. Keep in mind that a group policy will only cover you for as long as you are working for that organisation. If you join another organisation, the cover of the group policy ceases to exist. If you were to leave your existing organisation, you and your loved ones would be without the cover of a life insurance. Thus, it is ideal to get a personal life insurance.
- Do I need life insurance if I am single?
There are young earning individuals living alone who think that purchasing a policy for themselves could be beneficial. This creates a sense of illusion that since there are no dependents relying on their income, insurance is not required. If you are currently repaying a vehicle, house, or any such loan, the responsibility of repayment could fall on the shoulders of your nearest kin in the event of your untimely demise. Not only would this cause financial turmoil for them, but it would also mean them having to borrow money to clear your loans and debts. Thus, getting a life cover is important even if you are single or live alone. You could nominate a relative who could claim the sum assured and take care of your debts without facing any financial risks.
- Are there maturity benefits?
You would be surprised to know that yes, indeed there are maturity benefits in some types of life insurance. Plans such as ULIPs allow you to invest your money in market-linked funds. Based on how you invest and how much you invest, you could gain handsome profits if you stay invested long term. While ULIPs offer investment benefits, endowment plans can act as savings plans by offering significant, pre-determined maturity benefits. Return of premium term plans offer you the premiums you have paid as maturity benefit if you were to survive the policy term.
- Do I need to renew my policy?
No, you are not required to renew your policy each year. That is the one of the benefits of life insurance. Unlike general insurance policies, life insurance policies do not require you to do regular renewals. You only have to keep paying the premiums on time to keep your policy operational.
These were some of the frequently asked questions in relation to life insurance. If you wish to know the cost of a policy based on your requirement, you can use the life insurance premium calculator. The calculator gives you a rough idea about the cost of your policy.