Do You Really Need Life Insurance: How to Analyze & Select the Best?
Everyone knows the importance of life insurance as it is an inseparable part but still we always pray that it should not come to use. The main objective of this crucial product is to provide money to your dependants in your absence so that they do not face financial calamity and continue to live their lifestyle the way they are doing currently or in a much better way. So we can say that those who do not have any dependants, there is no need of such policy. But the question arise, does everyone need a life insurance? The answer is very difficult as it depends on individual’s financial needs.
So let’s understand whether you need life insurance or not? We will consider following three categories of individuals:
Unmarried male, 21 years of age:
Unmarried and young people often think that since they do not have dependants there is no need of insurance. However there are many young people having responsibilities such as educational loan and they should have a policy for a limited period. Because in case of death, parents will have to use their personal savings to repay the loan amount. Also you will get married and have kids. So buying a life insurance policy at a young age will also save you money as they are available at a cheaper price. Check out cheapest life insurance policy.
If your wife has died and your children are financially successful then there is no need for you to purchase a life policy. But for such people, health insurance policy is must.
You’ve got lot of money from ancestor’s wealth:
Such individual’s should think of following:
- What financial responsibilities you have?
- Do you have any ongoing loan?
- Are you planning to send your child abroad for higher studies and take educational loan?
- Do you have sufficient money for child’s marriage?
- If you have not purchased any health insurance policy, will the money you have be sufficient for any health related problems that may arise in the future?
- Are your parents dependent on you?
After giving a serious thinking on above mentioned points, if you think that the amount of wealth you have will not be enough to fulfil all your requirements, you should decide on taking life cover.
How often should you review the policy?
Life insurance should be reviewed at various stages of life such as start of professional career, marriage, having children, when you buy a new house and so on. This is because when you enter in a new life stage, your priorities change. When you analyse keep following things in mind:
- Start with estimating the corpus your loved ones would need each month/year to maintain the current standard of living.
- For how many years, they will need this money. Although there is no one fit solution for everyone, the money should last sufficiently till they start managing on their own. For e.g. if you children are young, then look for a plan which will last till they start earning.
Look at life insurance this way – if you do not have car then there is no need of car insurance. Similarly if you do not have dependants or if you have good amount of wealth which can take care of any unexpected events then no need to buy a life insurance. It is necessary when people are financially dependant on you and have no other resource for earning money to continue living.
Also, it is always good to buy a policy with a slightly higher insurance cover instead of being under insured.
How to compare life insurance policies:
With too many companies with each having different products, it becomes very confusing when selecting the best one and it is also important that policy is chosen with utmost care. In addition to this, we often listen to our relatives or friends opinion, what they have purchased and make decision based on their experience. But this should be avoided because everyone’s financial goals are different.
So here’s a quick guide on buying a policy after you have decided on requirement:
- List down potential companies based on their management, track record.
- Get customer reviews, fund performance.
- Most important is to check the claim settlement record of the company.
- Then visit the websites of each company, get detailed information on the product features, terms and conditions, limitations, benefits.
- Finally compare quotes and buy the cost effective one which meets your requirement.
A best policy chosen after thorough research and adequate planning i.e. estimating the amount of money you need to put aside to protect your family in an event of your death can only provide peace of mind to you and your family. Read tips on settling life insurance claim.