Life insurance policies provide protection against loss of income in case the insured passes away.
The beneficiary would receive the proceeds and is therefore safeguarded from the financial impact of the death of the insured.
Under this plan, the insured pays regular premiums in return for which the insurance company pays a lump-sum amount, known as a death benefit, to the nominees upon death of the insured.
To help you understand the basics of life insurance in a better manner, here are the 5 W’s of life insurance:
What are the types of Life Insurance?
While there are many kinds of life insurance plans, the two major types are term insurance and whole life policy.
- Term Insurance plans are the most basic life insurance plans. They simply provide a life cover and no profit component is involved. Term plans are available at a very affordable cost as premiums are comparatively low. You can also refer to policybazaar.com to know about the best term plans of the year 2016.
- A Whole Life Insurance Policy covers you for as long as you live. It offers dual benefit of life coverage and bonus. You stop paying the premiums after 10-15 years but the life cover goes on. However, the premiums in this kind of insurance plans are high as they are paid only for a limited duration.
Why do you need Life Insurance?
If you have family members who are partially or fully dependent on you, then you need to buy a life insurance plan.
Life insurance ensures funds to meet the financial needs of your family in your absence. Also, the money you get on maturity is a non-taxable income.
Having a life insurance policy gives you a comfort of knowing that your love ones would have a secure future even when you are no longer there to support them.
It is very important to get yourself insured if you have taken a loan or mortgaged your assets.
The sum received from your insurance policy can also be used to handle future expenses such as your child’s higher education or retirement funds.
Along with giving you a feeling of security, your insurance policy can be a source of future income for your family.
Whom should you insure?
The first person to be insured should be the breadwinner of the family. However, if both you and your spouse are working, then you both can enter a joint-life policy.
A life insurance policy can also be used as a source of funds for your child at the time of his higher education, if you insure your child.
The major advantage of such kind of a policy is that your child or spouse receives a guaranteed sum of money after a specified period.
When should you get Life Insurance?
It is never too early to buy life insurance. In fact, it is advisable to insure yourself as soon as you have people dependent on you.
Starting at an early age keeps the premiums of your policy very low. Anybody who is married and has kids should certainly buy a life insurance plan.
However, even if you are planning to get married, it is wise to invest your funds in a suitable life insurance plan; the policy would come cheaper to you than it would cost after marriage.
Remember, it’s never too late to buy life insurance policy. You can insure yourself at an age as late as 40 years.
All you need to keep in mind is that you choose insurance products that provide benefits and takes care of you during your retirement.
Where can you get a Life Insurance Policy?
It is both cheap and easy to buy an insurance policy online. We at Policybazaar.com assist you compare, choose, and buy the best suitable insurance plan for you.
At policybazaar.com you can find the best price for life insurance, by checking your application against multiple insurance providers.
Curated from basics of life insurance