Life Insurance

Life Insurance means putting a monetary value to your life so that in case you were to pass away, those dependent on you could still live on with dignity without having to look for outside financial help. Emotional jolt of death is enough to cope up with and some can’t get out of depression throughout their life after losing a loved one. On top, if the deceased was the bread winner of the family, the young spouse has no where to go and no way to support the growing kids. No friend or relative could come forward to pledge to take care of the affected family throughout their life even if he wants too. This is because everyone has their own responsibilities, bills and mortgage to take care of. Life insurance is indispensable and provides you peace of mind. It is an essential aspect of Risk Planning.

To put a value on human life is a very tough. Financial Tools such as Needs Analysis helps to give you an idea what it would take financially for your family to survive with dignity in case you were to pass away today? Your age, liabilities, income, savings and many other important aspects are kept in mind before you get an answer to this important question. Some prefer to do rough needs analysis in their own mind and choose an appropriate figure matching it with how much premium they can afford to pay. The key here is to understand the need for life insurance and be covered.

The cost of various types of insurance coverage offered by companies is based to Mortality tables which are uniform for all. Therefore the difference in pricing is not substantial and a quick comparison helps you understand that. Your choice should be based primarily on features.

There are many kinds of Life Insurance available today including:

Term Insurance

You could select a Term between 10 and 40 years to take care of some temporary needs. This could cover you till your kids grow up or till some liability is paid off. Most commonly used is Term 10/20 or 30 depending upon your need and budget. Term is an excellent product to start with since it is low in cost and usually convertible into a permanent product without an evidence of insurability whenever you are financially comfortable to afford it. It is just like renting a home till you are able to buy one.

Permanent Insurance

This kind of insurance is there with you till you are alive. It guarantees to pay a Death benefit whatever age death of an insured occurs. It protects your spouse throughout the journey of life and is a wonderful Estate Planning Tool too. Its amazing how much tax free cash you can leave for the next generation by paying very little today. The usual kinds of permanent insurance are-

Term Life:

This is pay as you go term as the name suggests. Many companies are offering limited 20 year payments on this product and also guaranteed cash surrender values.

Universal Life insurance:

This type of insurance allows you to choose investments within the policy and is a very good tool for tax-sheltered growth of funds. You can choose Limited 10/ 15 or 20 year payments / payments to age 65 or life pay. You could save for your future while remaining covered at the same time.

Whole Life Insurance:

This type of insurance can either be participating or Non- participating. A participating policy pays dividends or credits based on performance of the company. Again there is a choice between Limited and Whole life payments.

Both Universal Life and Whole Life policy can give you opportunity for savings that would grow over the long term thus becoming a component of your Retirement Planning too! Many times a combination of Permanent insurance with Term riders added is used to create a perfect product for you.