Life Insurance is one of the commonly available instruments. in life.
Life Insurance has 2 main benefits:
Life Insurance has 2 main benefits:
1. All insurances life insurance is aimed to protect against any financial, economic loss. With LIFE INSURANCE the loss is protected against the value of human life. This capital is defined as future income which is considered with value of current person. So we can say that life insurance is an investment for future income.
2. On insuring with life insurance one gets a tax free death benefit which replaces the capital value of insured. Definitely this doesn’t replace the person to make up for loss of the person but helps to make up the financial loss.
Whether you are young, new or a person in retiring age life insurance need is for everyone.
Many people feel that having too much of money spend on insurance is not good. But actually there are 2 approaches on basics of which one can decide how much insurance is needed.
1. Income Approach: This approach takes into consideration current income with the estimated inflation rate which helps to know how much insurance is needed to protect that particular income level over a specific time period.
2. Needs / Expense Approach: This approach uses your current expenses and estimated inflation to determine a minimum amount which will be needed to clear the outstanding amounts over a specific period of time.
Mostly all people need life insurance. But how much and how long one should buy depends on age parameter and for whom.
If one wants to buy life insurance some basic tips are given which needs to be considered:
1. All Insurance agents are not equal. Some insurance agents are captive agents which sell only one company’s product. They are good in terms of ethics and education but it is advisable to avoid captive agents.
2. There are 2 types of insurance-temporary and permanent. This type varies from person to person. Some people may require more of temporary insurance. So depending on your need you need to choose right type of insurance
Also there are various different kinds of features within different insurance products called as riders. These riders include disability income, waiver of premium etc. Such riders may or may not include overall cost of insurance but it should be taken care of at the time of selection of insurance.
One needs to ensure that they have a proper financial advisor to guide you with insurance and not just a sales person. This can be checked by asking him his professional designation, any specialized training they have received and which organization they belong to.
One also needs to ensure that the financial advisor they have hired must be of professional organization like National Institute of Insurance & Financial Advisors (NAIFA), Association of Advanced Life Underwriting (AALU) etc. The purpose to check for these organizations is because these organizations require agents to strictly follow stringent codes of conduct and receive additional training by them.
With taking such tips and advice on insurance one would surely be in a position to take a proper decision on when and what type of insurance to buy.
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