Life insurance provides a simple answer to a very difficult question: How will my family manage financially when I die? That’s why planning for the future is one of the most important things you can do to ensure your family doesn’t have to face any financial hardship when you are not around.
In simplest terms, life insurance is termed as insurance where the insurance company agrees to pay you an amount of money if you die or become terminally ill and in return you pay the insurance company regular amounts or instalments called premiums.
When would I need life insurance?
If you have anyone who depends on you financially, you should have life insurance to ensure your loved ones are not left with any financial hardship.
If you or anyone in your family fits in one of the categories below, you should think about having a life insurance policy:
How can life insurance help?
Life insurance can help your family or loved ones cover the following expenses when you are not around:
Some common life insurance myths which you should avoid when deciding whether you should take life insurance:
Life Insurance companies do not pay claims – All companies pay claim under life insurance as long as your family presents a genuine death certificate or a doctor certifies you have less than 12 months to live.
If I’ve ever had an illness I won’t be covered – It is true the insurance companies will go to your doctor to get your health report to assess the level of risk they are covering. However, insurance company will factor this in the premium. They won’t deny you life insurance, but you may be classified as a higher risk, with higher premiums.
If I have life insurance through work, I don’t need life insurance – Life insurance through work only covers three times your salary but the cover amount may not be sufficient for your family.
I don’t need life insurance – Unless you are superman or don’t have anyone financially dependent on you, you’re risking your family's financial well-being if you weren’t around or able to provide for them.
Life Insurance is expensive – Life insurance is one of the cheapest forms of insurance you can buy. The premium is based on your age, gender, occupation, smoking status and health.
If I put the money away in a bank account instead of paying life insurance premiums, I should have enough for my family – This may work if you are able to save regularly and are certain to live until after retirement, however chances are there will be times when you may not be able to save enough or may suffer a health scare at some point in life.