Do you need life insurance?
First of all, before heading to the discussion of do you need life insurance or not, we need to know what life insurance is. Life insurance refers to the contract between two parties, the first party is the insured who pays in monthly installments in order to get a payout when they pass away, the second party is the insurer.
Generally, a life insurance policy refers to the meaning of a considerate money guarantee to the insurance holder’s family after his death. The life insurance policy states that the person being insured pays monthly installments throughout their life and in return the insurer will pay out the insured amount to the named beneficiaries at the event of the insured person’s death.
How to decide if you need life insurance or not
Now, let’s come to the point why do you need life insurance? This is regarded as a million-dollar question “do you need life insurance?” Well, we all know no everyone in this world comes with a certain lifespan with certain years. We don’t know when death will arrive to take our life away. But we surely know after our deaths our beloved family will get into huge trouble. Especially the financial shock will be a great implemented crisis if the dead person is the one and only earner of the family.
Everyone feels a little uncomfortable when it comes to talking about death. As life insurance is an after-death service so many people are unsure about it. Most people are unaware of death indeed. Therefore, they are confused about “do you need life insurance?” depending on their current situation. They can’t clear their confusion about its worthiness rather they consider it as writing a will instead. Thus, the idea of taking life insurance becomes very hard for us to face. Because we mostly don’t want to think about our mortality as I previously mentioned.
Though often it might be a very tough question itself. In most cases, the answer is yes rather than no for the question “do you need life insurance or not”.
What is the purpose of life insurance?
We know life insurance is designed to provide financial help for your loved ones after your death. In general there are two main ways to take out life insurance. The first one is this, when you take out an insurance policy you will choose a beneficiary who will receive all the insurance money at once as a lump sum and the other method is receiving a moderate amount of money as a monthly salary. Though most people prefer to take all the money at once.
Types of life insurance
Taking a look at the types of life insurance, there are two main policies that we can distinguish, namely a whole life policy or a long-term policy.
Whole life: As we can derive from the name, the whole life policy has the purpose of covering you for your whole life. This is when many payments over the years add up to create a bigger sum to be paid out at death.
Term: As the name suggests this method only gives you the coverage for a specified term of 5-10-15 or 30 years providing death benefits only rather than using it as an investment for extra cash indeed. It pays out only if you die during the term being comparatively less expensive than the other method.
What is considered when calculating life insurance?
These policy providers follow some rules and maintain some regulations to run their policies. The cost of the policies relies on the holder’s health condition, based on the aspects of their health, financial status, and most importantly their age and physical condition. So, the lower the lifetime risk of a person, the lower the cost of life insurance as well.
Now if you are still confused about “do you need life insurance” I’ve some points for you to consider.
There are so many instances where life insurance would not be very beneficial for you rather it will cost you more than providing its benefits. If you are young and capable of earning a handsome amount of money life insurance would be a great idea for you as the costs are also cheap. In case you are elderly should keep in mind the certain criteria discussed above.
Therefore, it should be clear for you by now, do you need life insurance or not.