Rohit (28) decides to purchase a life insurance plan that would protect him and his family members against contingencies in life. So he begins his research while surfing the net he came across an article which made him aware of the 10 important things about life insurance which is absolutely needed to know.
Let’s take a look at the article Rohit read;
Life insurance is one of the supports of personal finance, deserving of consideration by every household. Yet, regardless of its nearly universal applicability, there remains a great deal of confusion, and even uncertainty, regarding life insurance. But equipped with the proper information, you can simplify the decision-making process and arrive at the right choice for you and your family.
Here are 5 things you need to know about life insurance:
- If anyone depends on you financially, you need to opt for life insurance. It’s nearly obligatory if you are a spouse or the parent of dependent children. But you may also need life insurance if you are a child of dependent parents or a sibling of a dependent adult.
- Life insurance does not merely apply a fiscal value to someone’s life. It helps to compensate for the unavoidable financial consequences that accompany the loss of life. Strategically, it helps the surviving members the costs of funeral expenses, outstanding debts and mortgages, educational expenses of children and acts as an income replacement.
- A term plan is the simplest, the least expensive and the most widely applicable variety of life insurance.
- Determining the optimal life cover for you doesn’t have to be complicated. Simply calculate your current expenses, the rate of inflation, your growing responsibilities and liabilities. It is recommended that your life cover should be at least 10x of your annual income.
- Know your options when canceling an existing life insurance policy so you don’t leave money, or coverage, on the table. If you have a policy that isn’t apt for you—or you simply no longer need it—it’s vital to proceed sensibly. Foremost, if you understand that you have overpaid for a policy that doesn’t meet your needs, but you still need life insurance, don’t cancel it until the new policy is in place.
After reading the article Rohit realized that these points will surely help him decide on a life insurance plan. He also accepted that life insurance is an important part of his long-term and comprehensive financial plan.