Do you need life insurance?
Life insurance is mainly sought by those people who have dependent family members and whose earnings go towards supporting the livelihood of others. So a person who doesn't have dependent family members doesn't necessarily require life insurance. If however, a person has people dependent upon him, has mortgages and loans and needs to secure the future of his children or parents in his absence, a life insurance policy is a must.
So before you purchase a policy, see what your liabilities are. Is your salary the only source of income for the entire family or is there another source (other earning members, inheritance, etc) of income? How many people are dependent upon you? Once you have answers to these questions, you will be able to understand which life insurance policy you need for yourself.
What kind of policy is best suited?
Like mentioned above, life insurance is not limited to a single type. There are different kinds of life insurance policies and you must have a clear understanding of these before you make your purchase. The different kinds of life insurance include:
Term life insurance - This is a kind of life insurance where your life is insured for a specific term and if you happen to die within this term, your nominees will receive the sum assured. If you outlive the policy, you won't get anything in return. This kind of a policy is best suited for a person who is young and free of serious family liabilities. A term life insurance is an effective yet inexpensive type of life insurance.
Traditional plan - In a traditional life insurance policy, you stayed covered for a longer period of time and at the end of the policy you get the money that you invested, back. This is a kind of policy that combines insurance and investment and is well suited for people with dependent family members.
So analyze your needs to understand what kind of policy you would require. Speak to your insurance agent and see what the available options are.
How would the features of the policy benefit your needs?
Different insurance plans have different benefits and costs. As a result you need to be fully sure about your own requirements to take full advantage of the available features. For example, if you have a mortgage and two young children, you should buy a plan that would ensure your family gets enough money after your death to pay the mortgage off and keep your children's education costs covered. If you just have a spouse you want to protect, you can buy a smaller coverage so that he/she continues to have a comfortable life after you are gone. You this need to analyze your own needs very carefully.
Also remember that a policy with a higher coverage will cost you more than a policy with a lower coverage. You therefore need to see if you can afford a policy before you purchase it.
Life insurance is a boon available to us and we must make the most of it. However, buying the wrong kind of life insurance can quickly transform the boon into a curse and you will end up paying more than receiving. Apart from this, even after being insured, your nominees may not benefit properly if the policy is incorrect or inadequate. As a result, go through your own requirements and analyze your needs very closely before you buy a life insurance policy.
Written By: Deepak Yohannan
The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal
For more articles by Deepak Yohannan, please visit MyInsuranceClub.com
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