If you are getting ready for your future, it is just natural to seek for a life insurance policy that will suit your future needs. Whether you have any dependents, of you just want to leave your family with large sum of money when you die, then you greatly need a life insurance. But with the variety of selection and different insurance policy out there, looking for the best one was certainly a tedious and strenuous process. To help you find the best life insurance policy, the following are some of the considerations that you should look into when searching for the right one:
- Determine Your Needs
Initially, you have to determine your needs first before making a leap. This will subsequently leads you a direction to search, as there are variety of life insurance plan in the market where each one was offering different benefits such as maturity cover, additional bonus and so forth. Therefore, you have to be sure of what coverage and benefits do you want from your insurance policy before you decide to invest for term insurance plan, ULIP, child plan and other life insurance plan as per your requirement—this will help you reduce the confusions and break down life insurance products. Then, look for those companies that provides the policy that you need.
The question of “How much life insurance cover do I need?” is quite complicated to solve, but the principle behind it is just simple. Ideally, your insured amount must be enough to work out on investment income that replaced the amount that you currently earn without eroding the ‘real value’ of the invested capital. Don’t forget to take in on your calculation any services you currently provide for your family (such as children) that will be paid of your die. Let’s take a look at the clear example below.
E.g. If you need to provide an ‘annual income’ of 20,000 dollars for your beneficiaries, this would require an ‘insured sum’ of 1,000,000 dollars at 2 percent (average return of investment which is 5% from the interest-bearing bonds that is less than the average inflation of 3 percent, therefore giving a return in capital for about 2%).
3. Your Budget for Premiums
It is very important to be realistic on how much can you really afford, because there is no point of being covered against uncertainties and unfortunate events of death if you can’t afford to provide your family with enough money for their necessities just because your insurance premiums are very high.
- Type of Life Insurance
There are two main types of life insurance, which is the whole life and term insurance. Term insurance covers you only for specific period of time, but it is much cheaper than the whole life insurance. On the other hand, whole life insurance, from the name itself, pays the insured value when you die. Depending on your budget and needs, you will need to decide which type of policy can you afford.
When you wanted to leave something for your family, deciding for the best life insurance is one of the most important factor to consider to secure their future. By adhering to the guidelines above, finding for the best one should come easy for you.