Life Insurance has always been the necessity for all people over the world, as there is no control over death of a human being. Even the inflation rates and luxurious lifestyle is incurring people to make their families financially secured even after their death with the help of life insurance plans. It’s a financial cover for contingency events in the life of a human being like death, accident, disability, retirement and so on may be due to natural or accidental causes.
Thus, in case of any unforeseen there will be loss of income in your household, which will greatly affect your dependent family members. So, life insurance plans provide a definite amount of money in case of death or accident, as covered under its term of policy. Though, there is no value of the human life, but life insurance helps your family to survive financially when your income stops.
Why Life Insurance is needed?
You may die soon, but your family has to live their life, for which they need financial support. This necessitates the need to buy life insurance.
Having a life insurance plan
• Ensures that your family has some financial support in the event of your demise
• Finances your children’s education and needs
• Extra income in case of accident or serious illness
• Constant source of income after retirement
• Finances other lifestyle and contingencies requirements.
Who all needs Life Insurance?
Almost anyone and everyone need a life insurance plan. No matter whether you are single, a family person, a housewife or a child, life insurance plans are for everyone. It helps you to meet your financial needs.
Thus, knowing how much life insurance you need depends on various factors and your specific needs. There are various insurance companies like LIC India, United India Insurance and many more, who offer different life insurance plans for different needs. So, you should seek the help of a finance advisor to understand your insurance needs and the right type of cover.
Life is precious, so is the security of your family after your death. This incurs the need to get your life insured with a life insurance plan that suits your specific needs. But, finding which insurance plan to choose and how much life insurance you really need is a daunting question to answer.
Almost everyone needs a life insurance plan, especially if you have a dependent family. Now, it’s up to you that whether you need a whole life insurance or a certain time period insurance to protect your family from financial issues. LIC of India, United India Insurance and various other companies offers a myriad of insurance plans.
Well, the question is how much insurance you need to secure your family from all the financial concerns.
Here are few steps to get the answer to this tricky question.
1. Amount of Debt and Mortgage: Carefully evaluate all the debts you have mortgage value and are you able to pay them out with your monthly income. And, in case not then you need a more life insurance plan to help your family pay off all your debts.
2. Monthly Spending: Have look at your monthly expenditure to know how much it will be needed to live a smooth life, after you will not be there. The more needs you have, the more big life insurance plan is all you need.
3. Monthly Savings: If you are saving some amount of money every month, then you will need less term life insurance.
4. Long-Term Saving Goals: Know whether you are saving enough money to pay your expenses once you get retired and if not then you will need more coverage plans.
5. Future Income: It’s essential to know how much income your family members will need if you aren’t around. All the above questions will help you answer this one.
While, calculating the amount of insurance you need, it’s even crucial to take into account the inflation cost. Your cost of living will go up as the years pass, but you might need less life insurance, as you age increases. Dependency of family members gets less, passive income, less years, all helps in lowering this cost. With time, interest rates and inflation change radically, thus you will need to recalculate your needs. Hence, it’s advisable to get your life insurance coverage periodically reviewed by your advisor to know whether you still have enough money you need or not.