A life insurance policy
is a contract between an insurance company and you as a policy holder.
By paying a pre-decided premium amount every year to the company for a
fixed term, your family members get a protection cover in events of
critical illness or death.
Through Life Insurance,
you ensure that your family stays financially independent in case of an
unexpected eventuality. That objective itself makes it an integral
component of life planning.
An insurance policy covers you as the insured and ensures sustenance
of your beneficiaries- the individuals you have enlisted under the
policy to be looked after in case of any unforeseen circumstances.
It provides financial support and assistance to your dear ones
including spouse, children, aging parents or even your business partners
and employees.
How Much Life Insurance Cover Do You Need?
How much coverage you should have on your insurance policy is a
difficult figure to determine because you would want to make sure that
your coverage is adequate. That is because excess coverage can affect
your finances due to higher premium payments and being underinsured is
never ideal. To make matters easier, a very elementary thumb rule is
that your life cover should be 10-12 times your annual income.
The best way to figure out the perfect policy coverage option is to let an insurance
consultant conduct a Financial Needs Analysis for you. This gives you
the estimated coverage you’ll need to ensure a secure future for your
loved ones. Insurance is a ‘prevention is better than cure’ adage
applied to real life.
Features of Life Insurance Policy
Life insurance policies have a number of features that make them a much needed life-planning tool.
- You get to choose the best coverage option, payable in affordable premiums.
- Based on your lifestyle, needs and preference, you can select from a variety of life insurance options ranging from pure insurance to hybrid insurance products like ULIPs and endowment plans where you get maturity benefits.
- Life insurance provides financial security of your dependents in case of any eventuality.
- Additionally, you also enjoy tax benefits on different types of policies under different sections of the Income Tax Act, 1961.
Asserting the point
By now, it must be evident how important a life insurance is for you
to ensure your family’s financial independence. Depending on the type of
insurance you choose, you are either building a corpus that you will
get on maturity or you are simply insuring yourself and your loved ones
to sustain their financial
independence in case of an emergency or an eventuality. In either
case, having life insurance allows you to live a life free from
financial worries as far as your future is concerned.
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