Life insurance has grown by leaps and bounds as a product and an increasing number of individuals across the country are purchasing the same to ensure that their families are protected in case of their unfortunate and untimely demise. Here are five important pointers you can use to make the most of the policy you purchase:
1. If you are a parent, get it!
The thing about being a parent or the sole-earning member of a family is that you will have people who depend upon you financially, and as a responsible adult, it is your duty to ensure that your family is financially secure at all times. Life insurance is one of those products that helps you ensure just that. You could be financially independent or stably retired, and your family will still be able to afford the adjunct luxuries you once provided them over the course of your employment. Moreover, insurance policies can help ensure that you have done strategic financial planning to be prepared in times of future emergencies.
2. Life insurance is not just a way to add monetary value to your life
While life insurance does add some monetary value to the life of the insured, it is way more than just that. It also aids in compensating the inevitable financial consequences following your death. It helps your dependents cover the costs involved with your last rites as well as in clearing off mortgages, outstanding debt, planned education expenses for the children, etc. The most important aspect of life insurance is that it lowers the financial burdens of your family and makes it somewhat easier to deal with your loss by offering peace of mind at least with regards to finances.
3. A policy is a contract
Life insurance policies are basically contracts between individuals and a life insurance company. It is important to honour the contract and make premium payments on time in order to ensure that your policy remains active so that your family will have no problems when making claims in case of your unfortunate demise.
4. Life insurance policies have four major players
The four major players in a life insurance contract include the insurer, the insured, the owner and the nominee. The insurance company plays the role of the insurer and will pay out claims if the insured individual dies during the policy term. The insured individual is one whose life is insured under the policy. The owner is the policyholder who has the responsibility to make premium payments to the insurer. The nominee is the individual who will receive the death benefit in case the insured individual loses his/her life during the policy term.
5. The two main life insurance varieties are permanent and term
A permanent life insurance policy comes with a savings mechanism through which the policy can exist into perpetuity. A term life insurance plan, on the other hand, is simple and relatively inexpensive and requests premium payments based on the probability that the life assured will die within a predetermined term – generally 10 years, 20 years, or 30 years.