Is Your Life Insured ? Life insurance ensures the financial security of dependents in case of non-earning member of the family. It is Very Important For Any one and Every One to get their Life Insured
Whether you are in a job, doing your business or working with professional Skills,You must take life insurance cover at least 10 times of your annual income.
Why buy a life insurance policy?
Life insurance policy gives protection to the family from financial risk in case of no life. Suppose a person has bought a home by taking a home loan. His Children are studying in private schools. The family is dependent on the Person for all household expenses.
If this person dies due to some illness or accident, then in case of his absence, His Family will not Suffer Financially. It Is Important for every One to buy An Insurance policy as it promises a certain amount of Coverage as agreed With the insurance company & if there is any Unfortunate Incident, Where, There is A Loss of Life of the Person Insured Due to any Foreseen Reason, The Dependents will get compensation from the Insurance company. In their Difficult Times, They Would At least Have The Financial Independence & Can Still Survive even after the Loss of the Family Member who was the Bread Earner for them.
Who is required to get life insurance?
A person should take an insurance policy for the financial security of those in his family who are financially dependent on him: if the person has a wife, children and his parents are old and have no income of their own. One should definitely buy a life insurance policy.
The most common reason for buying a life insurance policy is to provide protection to the family from any unforeseen event. The expenses of the dependent member of the family for the next several years can be incurred by using the amount received as compensation from the life insurance policy.
Debt or liability:
If a person has taken a loan or bought a mortgage or has pledged his property, then he should buy a life insurance policy. This will not only help his family to repay that debt in the event of his absence, but will also become a regular source of income for the family.
Who should buy a life insurance policy?
If you are the only earning member of your family, then you should first get your life insurance. Working Spouse – If you / your spouse are in job then both should buy life insurance policy. If you have children, you can buy a life insurance policy in their name.
Partners in Partnership Firm:
If you have someone involved in a partnership firm, then both of you should buy a life insurance policy. This type of policy will give financial protection to your firm in the event of any financial loss due to the death of your partner.
When should you insure?
Generally, you should buy a life insurance policy as soon as you start a job. To get life insurance coverage, a term plan is a great option to get maximum coverage at a low premium. To ensure financial security of a person dependent on your income, you should get life insurance. The lower your age, the lower your premium in a life insurance policy.
How long should you insure?
As long as your family members are dependent on your earnings for their expenses, you should buy an insurance policy only after estimating the amount of time. As long as you are an important earning member for your family, then you should get life insurance.
It is generally believed that if you are married at the age of 30 and you have two children by the age of 35, then their education and education will be completed in the next 25 years and by then they will start the job. . Accordingly, you should take coverage for the age of 60-65 years in a life insurance policy.
When it comes to determining the premium rates associated with different types of life insurance policies, there are a few factors that are usually considered by the companies.
Two of the most important ones are interest and mortality. In addition to these, expense is another deciding factor that has a lot to do with the premium rates of insurance policies, especially in case of a life insurance.
It may be referred to as the sum of money that the insurance provider is supposed to add up to their costs in order to cover different types of overheads such as operational costs of the company, investments on account of premiums and for paying the massive sums of money for claims filed by different clients. A few details on these factors are discussed in the paragraphs below.
The essence of a life insurance policy may be contingent upon a big group of individuals who co-share the death risk of the insured person.
In order to make a predicted calculation of the cost every member of the group should be responsible for, the insurance companies normally try to calculate the risks of the insured person dying in the upcoming years.
Mortality tables come in very handy in this regard since they provide the insurance providers with a basic estimation on the amount of money that they would have to pay annually on account of death claims. By making use of mortality tables, life insurance providers usually figure out the median life expectancy for different age groups.
Interest is the second most important factor involved in the process of computing premium rates in interest profits. The amount of money paid by the clients are usually invested by the insurance providers in different types of opportunities like real estate, mortgages, stocks, bonds, etc.
The idea behind these investments is to earn a handsome amount of money that might be adjusted on account of interest for the invested funds.
Expense is the third most important consideration when it comes to determining premium rates of a life insurance policy. Expenses involve the operational costs of the company to keep it running optimally. These expenses are usually estimated by the insurance providing company on the basis of different costs like salaries, postage, legal fees, rent, compensation for agents, etc.
The total amount of money charged to an insurance policy holder on account of operational expenses is normally referred to as expense loading. It may be thought of as a variable cost area that may differ for different insurance providing companies on the basis of their efficiency and expenses.
In addition to the above mentioned factors, there are a few others that cause a minor effect on the cost of premium rates associated with life insurance policies.
For instance, the time of the year when you buy an insurance policy also causes an effect on the overall price. According to a general trend, life insurance policies may be bought at a comparatively cheaper price if you sign up for it in the first quarter of the year.
This is due to the fact that majority of the insurance providing companies make use of mortality charts and age charts in order to determine the rates of different policies. Consider the below mentioned example to develop a better understanding in this regard.
If the insurance premium for a 60 years old person is $ 70.00 per month, it may be $ 75.00 for a person aged 60 and a half years while the premium rate may go as high as up to $ 80.00 for a 61 years old person. In simpler words, it is strongly recommended to buy the life insurance policy earlier in a year since according to the age charts, you might fall in an age group with older people if you wait for only a few months and your premium rates might eventually increase as well.
Life is to Live at the Fullest, However, Since Life is Uncertain and Full of Both Positive and Negative Surprises, Its Important for Every One to get Their Life Insured.