Most people don’t think they need a life insurance policy until they start a family. Then they suddenly realize they are grownups.
It is important to make sure that those who are dependent on you, like your spouse, kids, siblings, and parents, will be financially secure when you are not around.
That’s the basic essence of a life insurance policy.
I was one of those people who never considered life insurance as being necessary, not until an incident that affected a family who lived close to my place of work.
When the husband died, the family which once lived comfortably on the man’s salary fell into poverty.
Things were so bad that the kids were withdrawn from the private schools they attended and sent to public schools (thanks to our public schools).
The wife had to get a job, as her business suffered from overspending. It wasn’t easy for them.
Then it hit me. Things would have been different if the man had a life insurance policy.
At least the family would’ve had some money to fall back on.
You also need life insurance policy-just like you need health insurance, auto insurance, travel insurance, and general insurance.
It becomes even more essential if you are a salary earner with no other major source of income.
If your kids, partner, and relatives depend solely on your monthly payment for their upkeep, mortgage, and other living expenses, then they will suffer if it stops coming.
Everyone needs life insurance coverage. Even if you own a big business, you believe you can care for them, a life insurance payout will still be helpful.
How Life Insurance Works
A life insurance policy or death cover, as it is also called, works just like any other type of insurance; health insurance, travel insurance, auto insurance, and general insurance.
Where you get compensated for any loss you incur.
In this case, a lump sum is paid to your family upon your demise. The money is basically designed to ensure your dependants have something to live on when you are no more.
There are two types of life insurance and they both have different payouts.
Term Life Insurance
This is a short-term life insurance policy. It only covers a specific period, like 5, 10, or 25 years. There would only be a payout if the insured dies before the end of the policy.
Whole Life Insurance
A whole life insurance policy covers the remainder of your days. The family of the insured would receive a payout no matter when the person dies.
Reasons for a Life Insurance Policy
Here are 5 reasons why you need life insurance, regardless of where you are in the world.
You Don’t Earn Much.
Your monthly salary may not be large and, as such, you may not have a lot saved up for your family.
So, buying a life insurance policy will ensure they get a huge sum of cash whenever you pass away.
This serves as a relief knowing they would fend well when you aren’t around.
To Cover Children’s Education and Expenses
Your family is already used to living comfortably with your paycheck and will be affected when it stops coming.
The insurance payout provides some sort of relief that helps cover expenses like education, living expenses, and others.
To Pay Off Debts
Most people leave a lot of debts for their families when they pass on. Having an insurance policy provides a leeway to clear those debts and affords the family a fresh start.
Accommodation is one big expense for every family, especially if they are living on rent.
We have seen families thrown out a few months after the death of either parent.
The payout from the policy can enable the family to renew the mortgage, buy a new home or move to a smaller place.
To Invest in a Business
Life insurance payouts have been a major boost for most families.
When they invest the large sum from the payout into shares or other profitable ventures, it provides a source of income for the family for years to come.
Do you think you need life insurance?
Here is how you can get the best insurance deal. These insurance tips can come in handy whether you are seeking health insurance, auto insurance, travel insurance, or general insurance.
Get multiple quotes
One key to knowing the insurance company with the cheapest rate is to getting multiple life insurance quotes from different companies and then comparing them.
This will help you discover the one with the best rate.
Even if you have a specific insurance company in mind, collecting multiple quotes will help you know if that company’s rate is good enough.
Most life insurance companies have reduced their rates over the years due to medical advancements which have led to a longer life span for individuals.
So when your current policy expires, you should still collect a quote and compare it with what you are paying your current insurer.
If your major goal is to get a cheap life insurance policy, then you need to refuse any policy rider or insurance add-on.
You may be offered the option of purchasing a child policy or other enticing offers.
No matter how good they look, these insurance riders come at an extra cost.
Just refuse them and pay for the main policy you went for.
However, if you have the budget for it and the offer is good, then you could get them as well.
Live healthily and quit dangerous lifestyles.
Life insurers charge you more if you are unhealthy or live a lifestyle that is detrimental to your health.
They have done all the research and know the lifestyles that kill people. So when they notice these in your form, they charge you more.
For example, an insurer will charge a smoker more than a non-smoker.
Drug addicts and people with different dangerous addictions will be charged higher premiums than those who don’t have such problems.
Those with dangerous hobbies like sky diving, mountain climbing, etc., will also be charged higher rates.
You should quit these habits to get a lower premium and safeguard yourself.
Engage in less dangerous hobbies and you will be safer and also be given better rates.
Bundle your Insurance policies
Insurance companies give huge discounts if you bundle your life insurance coverage with your home, car, and other policies.
This is one good strategy you can leverage to minimize cost.
Just choose an insurance company and switch your car, home, and other insurance policies to it.
Get a policy now, don’t wait anymore.
Age is a major factor that is considered in life insurance. The younger and healthier you are, the lower the insurance company will charge you.
If you are still young and you are thinking you need to get older before buying a life insurance policy, then you are missing the point.
This is the right time to make the purchase; it will be cheaper and more affordable.
Additionally, issues about health can never be predicted, so you should go for the policy now that you are healthy.
Do you have life insurance?
Do you agree that you need one?
Let us know in the comment box below.