A family life insurance is designed to secure the future of your family. In case of the sudden demise of a family member, the other members receive the death benefit. This death benefit is useful as a source of income and for repaying any outstanding debt. There are several types of life insurance available that you can buy for yourself and your family members. Before choosing one, it is important to know the components of life insurance plans thoroughly.
When should you buy family life insurance?
The timing is everything for purchasing any financial instrument. When you are buying insurance for yourself and your family, the right time can help you save a considerable amount of money. Depending upon each family member’s earnings and debts, they each will have different needs. If you are a senior citizen and do not have any dependents or liabilities, you may not need a life policy. Whereas a working individual in your family who is the breadwinner may require additional cover. It is not a must-have that the sum cover of all life insurance plans of family members should be the same. Instead, consider the financial roles and liabilities of each member and choose the life cover accordingly. Also, age is a major factor in buying any life insurance plan. The more your age is, the more likely will be your premium. Hence, it is important to buy a life policy as early as possible.
What factors should you consider before buying a life insurance policy for your family?
When you are looking for a family life insurance plan, here are some factors that you need to consider:
Take your liabilities and dependencies into consideration
When you buy a life insurance policy, the aim is to protect your family from any financial problems. The dependents that you have are the key in deciding your life coverage. You need to ensure that there are enough funds for your dependents to live life with ease in your absence. Also, the current liabilities you have and any liabilities that you are planning to take, should be considered as well. This ensures that your liabilities do not constrain your family when you are not around. Add the cost of your liabilities and dependencies to get an approximate amount of sum cover. Use a life insurance premium calculator to know the other variables of your desired sum cover.
Know the fine print
There are several types of life insurance and several companies selling life insurance. When you, as a policyholder, are choosing one, ensure that you know all the terms and conditions of your policy. The policy that you choose will affect the lives of your loved ones in your absence. Ensure that you have mentioned all your details correctly. Do not hide any health-related information to get a lower premium. Instead, be transparent about your health issues to your insurer. Hiding any health-related or habit-related information may lead to a rejection of the claim in the future. Ensure that your nominee is well-aware of life insurance and coverage beforehand.
Think and choose carefully
With so many types of life insurance, it’s difficult to choose one. Based on your investments and financial goals, you can either opt for traditional life insurance or life insurance with a saving or investment component. Your type will determine the premiums that you would pay, the tenure of your life cover, and even the amount of death benefit. For example, term insurance provides high coverage for low premiums but has a fixed period. Whereas traditional insurance may have a higher premium for the same coverage, the period lasting until the demise of the policyholder. There is no one best life insurance for all.Instead, it depends upon every policyholder’s individual needs.
A family life insurance plan is a huge decision that affects every member of the family. It is a long-term decision and needs to be well-thought as it helps avoid any hardships in the future. Seek advice from your financial expert who can guide you towards which kind of insurance may be the best for you. Also, use a life insurance premium calculator and calculate the premiums of different insurance companies. Comparing different plans will give you clarity on which one you should choose.
