Looking For A Life Insurance Policy?
These factors discussed here below can be used to assist you on the type of life insurance cover that you might need.
Determine how much cover you need. This guide is especially for those who are doing it on their own without professional assistance. To enable good calculation and explanation factors such as money value, time and inflation will not be considered.
Consider any financial obligations which must be remitted should premature death, unfortunate incident or permanent or semi-permanent disability happen. Those that in the list of what should be paid off include mortgage loan repayments, business or personal debts among others.
Are there dependants who used to be financially supported? Among them are children, spouses or aged parents. If such persons are there then they should continue to be supported and hence a plan this should be arranged. A 20 year support for spouse, kids and aged parents the annual amount is $20,000 and this is an example only given if the insurer has met his untimely death or been permanently or partially disabled. $400,000 is the sum assured which will be required at this time.
If a person who has taken the insurance life cover meets with an unfortunate incident it is good to establish if there is any financial gift to be given. There are people who select individuals in their life who they would like to receive a financial gift long after the person who had taken the insurance cover is deceased. There are people who would want to reward charitable institutions. In case of any, all this should be calculated so as you can arrive at the correct insurance cover to purchase.
Income replacement is a tricky question and there are different versions. Whether the income growth rate has to be considered makes it an answer to a question that is not straight forward. There is however a thumb rule for this and it is to first established the duration when the income has to replaced. By example, if the income replacement is ten years, the sum assured will be $500,000 that is if your current salary is $50,000. This concludes that for ten years, $50,000 per year can be withdrawn.
The market offers various insurance covers all of which are good but before you can decide on the one to take it is important to know the type of insurance cover that you need. Ability to pay insurance premiums should be the first consideration before even calculating the insured sum and the time the insurance policy will be covered.
This deliberation is a guide or a represention of the insurance market and the intention of this discussion is just for information. Seeking an insurance adviser is so that they can give insurance or financial advice.