You can get insurance for your car and your home. That’s because you love them, and you cannot afford to lose them. But have you got insurance for your life and your loved ones? If not, it is high time for you to think about getting a one.
What is life insurance?
Life insurance can simply be defined as a contract that is drawn in between an individual and an insurance company. After signing the contract, you will need to make a monthly or annual payment. Then you will be able to pre-arrange a specific amount of money for the loved ones. They will be able to get that amount of money after your death. Usually, the loved ones will be able to get at least 10 times your annual salary after your death. Therefore, you can do the calculations and see how much they will be able to get after your death.
You love your family and getting life insurance is one of the best things that you can do in order to showcase your love. You don’t just go ahead and purchase the life insurance policy because you are going to die. You buy it because you want your loved ones to remain finally secure after your death.
By obtaining a life insurance policy, both the policyholder as well as the beneficiaries will be able to keep peace of mind. That’s because all sorts of financial difficulties that would arise after the death of the breadwinner of the family can be eliminated. After the death, you can directly proceed to the claims process. If you want to receive the claim within the shortest possible time, you need to make sure that accuracy is maintained throughout. Then you will be able to speed up the process and get the claim to your hands without any hassle.
How to find the best life insurance policy?
There are numerous steps that you should follow when you are trying to locate the life insurance policy. In fact, the decision will never be an easy one because you have so many options. The first decision you should do is to pick an option in between permanent life insurance and term life insurance.
In case if you are trying to get a life insurance policy with a limited budget, a term life insurance policy will be a good option to consider. However, it will only be providing protection to you for a specific duration of time. This is not a cash value life insurance policy. Due to the same reason, you will have to pay lower premiums when compared to a permanent life insurance policy.
The needs that you have to obtain a life insurance policy would change along with your age. This is where you need to understand that most of the term life insurance policies are convertible. You can convert them in a permanent life insurance policy. However, not all life insurance companies allow this. Hence, you should have a chat with your life insurance company and get to know about it.
As the starting point of finding a life insurance policy, you can go ahead and add all the expenses that you wish to get covered. This includes mortgage, income replacement for work and the college expenses of your kids as well. Then you should reduce the amount that your family will be able to cover from existing life insurance policies or savings. Then you will need to keep the remaining amount in mind and apply for a life insurance policy.
When you do these calculations, you may end up with a high amount. However, you will need to understand that you need that amount to ensure your survival when the unexpected happens. If the life insurance policy is not affordable to you as of now, you shouldn’t delay the decision of getting it. You can buy a policy that you can afford. Then you will be able to add more items to the policy at a later stage. However, you should also understand that the rate after few years will be much higher than what you can afford as of now. That’s because it will take your health condition and your age into consideration.
Who needs life insurance?
Here are some of the most prominent groups of people, who should think about getting a life insurance policy.
- Parents having young children
If you are a parent who has young children, you need to understand that you hold the responsibility for their future. When you come across a problem where you can no longer work, they will have to face numerous hardships in the future. This is where you should think about getting a life insurance policy. Then you will be able to make sure that you are not compromising the savings to ensure a better future for the kids. Instead, the life insurance policy will keep on delivering support needed by the kids at all times.
The life insurance policy will not just support education of your kids. You can also get that to take care of the day to day household expenses, such as food bills and mortgage. In addition to that, recreation fees, daycare expenses and all other miscellaneous expenses will be managed by the life insurance policy of your child. If your child is grown up, you can think about getting a policy, which is just enough to help them until they complete education.
- Spouses that contribute a lot towards the income of a family
If you are the person who brings in most income for the family, you will need to think about getting a life insurance policy. That’s because your family will not be able to survive without your income. This can deliver a safety net for the spouse who is depending on the income generated by you. You can make sure that your partner will not have to go through any struggles, when you cannot earn an income to support your family.
Sometimes you might feel that it is not needed to get a life insurance policy on your own as your employer is offering a one. However, the life insurance policies offered by employers are usually limited and you will not be able to get them to cater all the needs of family. That’s why it is important to think about obtaining separate life insurance policy.
- Older adults who don’t have any savings
Even if you are an older adult, who doesn’t have any savings, you can think about purchasing a life insurance policy. Imagine what would happen when you die without any savings. Then your family members and your loved ones will need to bear all the cremation and funeral expenses. You shouldn’t allow that to happen. This is why you will need to keep a life insurance policy. Then you can get all the support needed by the loved ones and family members to bear funeral expenses.
- Adults who have private student loans
If your child has obtained a private student loan, it is worthy to obtain a life insurance policy. In case if the child passes away, you will have to continue with making repayments to the private student loan. To make sure that you don’t have to pay for it, you can get a life insurance.
These are the different groups of people who can think about getting a life insurance policy. If you are one of them, you can proceed with your decision without keeping any doubts in mind.
How does life insurance work?
Before you go ahead and buy life insurance, you need to have a basic understanding of how it works. Then you can figure out what you are getting for the amount you spend. There are some key phrases, which you need to understand at the time of going for a life insurance policy. Here is a quick overview of those key terms.
The policy is the contract that is signed in between the insurance company and you. You need to carefully go through the life insurance policy before you sign it. If you don’t understand any phrase, you should ask for more information about it before you sign. Then you will not end up with any surprises in the long run.
The beneficiary is the person(s) that you select in order to receive the death benefits that come along with your policy. In most instances, this will be your spouse and your children.
- Death benefit
Death benefit refers to the exact amount of money, which will be given to the beneficiary after your death. As discussed earlier, this will be around 10 to 12 times the annual salary you receive.
The person who signs the life insurance contract with an insurance company will be the policyholder. When you sign the policy, you will automatically be nominated as the policyholder. However, you should also understand that there is a possibility for you to purchase a policy for another person as well.
Premiums are the yearly or monthly payments that you will need to pay for the life insurance policy. It is possible for you to get either monthly or yearly payments according to your preferences.
After you sign the contract, all you have to do is to keep on paying the premiums. Then the insurance company will offer a guarantee and say that they will be paying the death benefit to the nominated beneficiaries after your death.
When you die, your loved ones will not have a sufficient income for their survival. On the other hand, a considerable amount of money will have to be spent on funeral expenses as well. Many other financial needs would arise after your death and the life insurance is in a position to provide enhanced protection to you against all those.
Why should everyone have a life insurance policy?
Now you have learned a lot about life insurance. With that knowledge, you would be wondering whether it is worthy for you to go ahead with a life insurance policy or not.
Yes, it is worthy to go ahead with a life insurance policy. That’s because it can cover most of the financial requirements that arise after your death.
Even if you are a young professional, who has obtained student loans and credit cards will be able to get your debts covered off with the life insurance policy. Likewise, the parents will be able to provide financial security for their kids after an unexpected death.
If you do the calculations, you will be able to see how much money is being paid to the beneficiaries after your death. This will be a considerable amount of money and you will never be able to save it on your own. Therefore, it is recommended for you to go ahead with a life insurance policy. You should never consider it as a waste of money. You will fall in love with all the great benefits that the life insurance policy will bring to you in the long run.
Following are some of the most prominent benefits that you will be able to experience with the life insurance policy. These benefits will help you to learn more about the return that you can get out of the investment.
- You can keep the peace of mind
Once you purchase a life insurance policy, you will get much-needed support to keep the peace of mind. That’s because you don’t need to worry about what will happen when you no longer can work due to an injury or an illness. You will still be able to afford all your bills and take care of your expenses as well as expenses of your loved ones. All you have to do is to focus on your recovery and the life insurance policy will take care of your finances. The life insurance policy will ensure that you will never run into debt.
- You can rely on the life insurance policy
When you do an investment, you will have to be mindful about the risk associated with it. However, there is no such major risk associated with buying a new life insurance policy. It will be a reliable investment that you can do. You might have heard about some negative stories about life insurance. But if you deep dive and take a look at the life insurance claims, you will figure out that rejections have been made due to valid reasons. If you can stick to the terms and conditions of your life insurance policy, you will never have to deal with a rejection. Instead, you can keep the peace of mind at all times.
According to a recent study, it has been identified that more than 90% of the insurance providers have paid life insurance claims. Hence, you can pick a life insurance company and go ahead with the life insurance policy.
- You can get medical care
Along with a life insurance policy, you will be able to pay for the private healthcare costs and rehabilitation expenses during a critical illness or a serious accident. Healthcare expenses are not cheap. You will have to spend a considerable amount of money on healthcare costs after you become a victim of a critical illness or a serious accident. But if you have a life insurance policy, you don’t need to worry too much about the healthcare expenses. That’s because your life insurance policy will cover up all the expenses. Hence, you can receive the best possible care at all times.
- You can provide protection to your loved family members
If you are the breadwinner of your family, imaging the struggle that your family members will have to go through without your income. But if you have purchased a life insurance policy, you will not have to worry too much about it. That’s because the life insurance policy will financially support your loved family members after your loss. For example, your family members will be able to pay their bills and afford meals. Your kids will be able to continue with their education.
Based on these factors, it is possible to tell that getting a life insurance policy is one of the smartest investments that you can make. Hence, you don’t need to keep any doubts in mind before you buy a policy.
Different types of life insurance policies available at Octo Insurance
The life insurance policies that you can find out there can be divided into two main categories as term life insurance and permanent life insurance.
- Term life insurance
With term life insurance, you will be able to receive coverage for a specific duration of time. If you or the spouse dies during this term, the beneficiaries nominated by you will be able to receive the financial grants offered by your life insurance policy. This can be considered as the most affordable form of life insurance policy as well.
As you continue to pay premiums, you will be paying for the death benefits, which the beneficiaries can receive. This death benefit will be paid as a monthly payment or as a lump sum.