Life insurance is a contract where an insurance provider protects an individual by giving financial protection in exchange for premium paid by that individual.
Although, we may know what life insurance is, many of us still wonder about who needs it, when to buy it and where to start. Let us go through each of the questions individually.
Who needs Life Insurance?
Life insurance always focuses on financial protection. So, the simple answer to ‘Who needs it?’ is those individuals who require financial protection. In other words, an individual with people depending on s/he requires life insurance. One’s partner, children and old parents are the dependents people usually have. One has to support their partner, take care of old parents who can no longer work and raise their children until they can be independent (stand on their own foot).
Generally, all the insurance providers give priority to young people and family people, if one is able they can even buy life insurance for other people as charity. Young people have their entire life ahead of them and hence they need to carefully plan for everything. Young people taking initiative can be extremely helpful for themselves as they can start to buy life insurance as soon as they are able to save their income. A newly wedded couple’s expenses begins to increase as they start a new part of their life. Moreover, once they have children, they have to raise them and educate them so that they can stand on their own in future. but , education nowadays costs a lot more than you can even expect. So, for this purpose you need plans like life insurance as financial protection. An individual who wishes to leave an inheritance to their heir also needs life insurance as it promises to provide death benefit to the nominee after the policyholder’s unfortunate death.
It is indeed simple to determine who needs life insurance. One who desires to have financial protection needs life insurance as it main motto is that financial protection. So, do you need life insurance?
When to Buy Life Insurance?
Though you have a clear idea of life insurance, you may be confused as to when to actually buy one. The answer to this question is also quite simple: “as soon as possible”. You have to pay a specific amount as premium monthly or yearly for any life insurance policy. So, when you buy life insurance as early as possible, you will have more years to go until your payment is due. When the time period is extended, the installment you have to pay can be divided into more parts leading to a small premium amount.
There are some specific moments in life when you might buy life insurance. They are:
When you are single and start saving:
As soon as you start saving you might as well buy life insurance as you can significantly decrease the premium amount by having your cost divided into more installments.
When you are married and plan to have children
When your parents have aged
Insuring your parents at an early stage can help you to keep up with expenses when they cannot support themselves. You can pay for their health expenses in their later years.
Where to start?
Life insurance can be tricky at times. You might not be able to decide where to start to get life insurance. So, here are some of the tips as for where to start:
- As we mentioned above, startly as early as possible is a plus point.
- Start by determining how much life insurance you actually need. For this you can simply determine the following things:
- Your Resources
- Your debts
- The cost to raise your children
- Tution fees of children
- Cost required to support your parents
- Once you have a general idea about the above, you can simply deduct your resources from the sum of others, then you will have a rough amount of how much life insurance you would require.
- Decide whether to go for term life insurance or whole life insurance.
- Then, make a list of life insurance plans available and compare each of them carefully. Determine the benefit provided by each and how much premium you have to pay.
- Check each policy’s settlement process and complexities involved in it.
- Consult an agent for more information.