Hi Everybody!
Through this blog I'll walk through all aspects of personal finance management. I like to discuss about 'Life Insurance' first. Is every person require life insurance? obviously not. First question comes in mind that Do I need life insurance? According to me, If your earning contributes to family requirement or maintain your family life style or paying out any liabilities or any necessary financial support, Then you must need life insurance. Essentially Life Insurance provides financial protection to your family in case of your untimely death. After your untimely death your family financial condition will be critical. and It will be hard to fulfill basic requirement as House rent, children's studies, their marriage and any other requirement. To cover you under a life Insurance policy, an insurance company will charge you a certain sum of money (called the premium) periodically. The premium paid helps cover the risk that the life insurance company takes by insuring your life and in turn entitles your family to receive a fixed lump sum. This good lump sum amount help your family to maintain their life style without you.
The premium you pay depends on a variety of factors including age, health and the amount of life cover you want to name a few. However, premiums are typically lower for younger, healthier people, so starting early is always beneficial for you. At this point I'm sure you can make decision that you require Life Insurance or not.
When You decided that you require a Life Insurance then next question arises How much? Means how much life insurance is require to cover your family. There are many tools available to calculate life insurance requirement. If you have understood the requirement then it is easy to understand calculator also. One of such calculator is present at SbiLife Calculator. There are many such calculator. Summary is your life insurance should cover your all liabilities. You can calculate your required life cover after learning from these or consult your financial adviser.
How much premium has to pay for life insurance? Different companies may offer you different premium for same cover. For this you have to contact respective company. But choose company based on there past record not just for premium amount. Since this is a trust that will help your family when you will not be with them.
What type of insurance product should be chosen? There many instruments or product types are available to cover your life. Some of the are:
Through this blog I'll walk through all aspects of personal finance management. I like to discuss about 'Life Insurance' first. Is every person require life insurance? obviously not. First question comes in mind that Do I need life insurance? According to me, If your earning contributes to family requirement or maintain your family life style or paying out any liabilities or any necessary financial support, Then you must need life insurance. Essentially Life Insurance provides financial protection to your family in case of your untimely death. After your untimely death your family financial condition will be critical. and It will be hard to fulfill basic requirement as House rent, children's studies, their marriage and any other requirement. To cover you under a life Insurance policy, an insurance company will charge you a certain sum of money (called the premium) periodically. The premium paid helps cover the risk that the life insurance company takes by insuring your life and in turn entitles your family to receive a fixed lump sum. This good lump sum amount help your family to maintain their life style without you.
The premium you pay depends on a variety of factors including age, health and the amount of life cover you want to name a few. However, premiums are typically lower for younger, healthier people, so starting early is always beneficial for you. At this point I'm sure you can make decision that you require Life Insurance or not.
When You decided that you require a Life Insurance then next question arises How much? Means how much life insurance is require to cover your family. There are many tools available to calculate life insurance requirement. If you have understood the requirement then it is easy to understand calculator also. One of such calculator is present at SbiLife Calculator. There are many such calculator. Summary is your life insurance should cover your all liabilities. You can calculate your required life cover after learning from these or consult your financial adviser.
How much premium has to pay for life insurance? Different companies may offer you different premium for same cover. For this you have to contact respective company. But choose company based on there past record not just for premium amount. Since this is a trust that will help your family when you will not be with them.
What type of insurance product should be chosen? There many instruments or product types are available to cover your life. Some of the are:
- Traditional Plan : Where your premium are in safe investment and gives descent amount on maturity. But generally premium is high.
- ULIP: ULIP or Unit linked investment plan has mixture of life insurance and investment. Means some part of your premium will go for life insurance and rest will be investment as per your selection. ULIP provide you facility to select allocation of your premium (investment part) how much you want to allocate for debt and how much in equity. They provide facility to change this allocation percentage free of cost. Looks a very good insurance plan But they used to charge for each premium payment and other charges. In market there are many ULIP plan. before investing, please read all documents carefully or consult your financial adviser
- Disposable life Insurance: I think this is new type of life insurance plan where they provide you more cover for very less premium. cover will be provide till premium is paid but there is maturity amount. This is useful to person whose job is risky or not having financial width to pay premium for desire insurance cover. To explain this I like to take example of truck driver that is whole and sole bread and butter earner for family. But can't afford to pay premium for his life cover. He can go for disposable life insurance where he can get more life cover with less premium.
Choose you Life Insurance product as per your requirement and premium payment capacity.
Disclaimer: I'm not a financial adviser or not hold any degree in finance. Before taking life insurance please consult your financial adviser.
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