Life itself has become very unpredictable in this fast paced world today. In a race to make more money and lead a luxurious life, we have forgotten to take care of what should be our main focus- our health. Needless to say, the increase in the number of illnesses over the years and the amount of money being poured into research for new drugs and cures, has only encouraged more people to apply for certain risk covers. That is where insurance comes in. An insurance is just a cover taken by a person, in order to eliminate or minimize the unforeseen risks in life.
Life Insurance has now become a must for most people. A life insurance policy is a safe measure to protect the financial future of your family, as it supports you with financial backup in case of emergencies. Such a policy is now considered to be a gift to the members in a family after the death of the main breadwinner, as the risk of no income is substituted with timely aid. Disability too is covered under a life insurance policy. Here it covers, the amputation of body parts, sensory impairments, psychiatric conditions, and any neurological or cognitive impairment. You need to understand first what your expenses on a monthly basis are and then decide how much money your family would need on each year. The figure you arrive at should be multiplied by 25 to take into account tax for the next 20 years at least.
The policies that are usually taken by most people are :
Term Insurance – Here, a small monthly installment is paid each month, for a certain period of time. Money is lost once the payments stop, ad there would be no payouts if you are alive after the period of payment is over.
Whole Life Insurance – Here, you would be insured for the period of your whole life. The amount paid is kept aside in an investment fund, and the premiums remain the same usually without increasing. Here, a payout however is guaranteed.
Short Term Disability Policies – Disabled people too have special policies which would benefit them. In this case, there would be a waiting period of 0 – 14 days ( 2 weeks), where the benefit period would be no more than two years.
Long Term Disability Policies – Here the waiting period could range from a few weeks, to a few months, with the benefit period ranging from a few years to a lifetime.
In the case of only disability policies, there are two different clauses. Non cancelable, means that the policy cannot be canceled by the insurance company unless it is a situation where the premium has not been paid. A policy can be renewed each year without an increase in the premium also. A guaranteed renewable means that the policy can be renewed with the same benefits, but the insurer can raise the premium being paid.
So what are the benefits offered in a life insurance? Additional insurance can be purchased at any time, and the benefits given would also depend on the kind of disability you have. As and when the cost of living rises, a cost of living adjustment allows you more benefits over time. There is another provision called the partial disability rider that allows you to work part time, take a salary and still receive a small disability payment. Furthermore, there is another provision called the return of premium, where it is required that if no claims have been made during the time period mentioned, part of the premium can be given back to you. A waiver of premium provision also means that no premium would need to be paid, on the policy if your disability continues after a period of 90 days.
It can be understood that taking a life insurance is worth the payment made each month. After all, when it is for your family there can be never be an expense that is too big. At the same time, it is important to be aware of what exactly you want to go in for. It is not uncommon to find a lot of insurance companies, having very competitive policies in the hope of getting more people to sign up with them. In addition a lot of them may make huge promises too. The first step to taking a life insurance should be going in for a thorough medical checkup. This is a procedure that any insurer would insist on. It is important to know your age, and the duration of the period for which you intend to get insurance coverage. Secondly, do not stay fixed or loyal to just one insurance company, but try meeting up with as many companies as you can.
This would be very beneficial to you, as they would give you pamphlets and flyers which would better detail their benefits and policies. More importantly, with the Internet now being the main mode of communication, getting quotes on the net is not difficult either. More over, there are a lot of brokers and other salesmen, who would be able to assist you better, so do not hesitate to ask them your doubts. When you do finally settle on the kind of policy you would like to take up, look around at the insurance companies themselves. Avoid any new startups and go for an insurer who has been around for a much longer time. A company’s financial strength is important. Sometimes, some insurers charge higher premiums if you choose to renew a policy, or even demand a penalty or a fee on cancellation of a policy. Finally, speak to your advisor about the option of having changes made in the policy if a need arises. Having a flexible policy that allows you to change your requirements, convert your policy, or renew if the need arises is an option you should take into consideration.