However, the amount of life insurance each family wants varies greatly in respects to their needs and requirements. A life insurance policy helps pay off a person’s present debts, and helps his or her family survive and maintain a normal standard of living, in case of his /her death. So, if you are an individual with no dependents, you can skip away such policies, but if there are others who depend on your income, then getting insurance is a good idea to bridge up your earning potential when you are gone.
While taking an insurance policy often a person stays concerned that it should not be insufficient for their family and their survival to continue live the same lifestyle what they have been living around. A lot of calculations and factors are to be considered while determining the answer to this question. But inspite of all the research, planned approach and work out people tend to make few mistakes by assuming things while purchasing their cover. Lets understand the common mistake consumer does during the purchase: We let premiums make the decision for us. Lower the premium costs best is the policy for us. However, this is the actual misconception people have. Your life insurance policy should depend upon your family needs, resource in hand and existing debt or loans.
Most people think insurance as an investment. In real sense it’s a necessary part of your sound financial plan. Although, products like whole or universal life may give returns but term plans will only protect you till the maturity phase. So never take them as investment tools. Once you buy the policy you don’t check it to make sure you’re well insured or not. Every once or two years you need to re-examine your policies to see if you are doing well in cover. Events like marriage, pregnancy can tend to re-shuffle your insurance needs. You might need a higher cover.
We forget to change beneficiaries. Suppose you get divorce and remarry you have a new baby, or if your partner dies, you need to review your insurance to make sure you’re not leaving a stash of cash to anyone at all. This is common mistakes which people make. From time to time you have to decide upon the correct beneficiary for your policy.
Sometimes it is appropriate to drop one type of life insurance policy and replace it with another, especially if your life circumstances have changed. But you should be careful about dropping a policy just to get a “better-performing” as it might end up with higher premium payments.
With the growing complexities & uncertainties across the world life insurance policy has become a major household product that every individual should shop for. It is a necessity now and redefines the basic needs of human being for living stating as “Food, Shelter, Clothing & Life insurance”. Another added advantage is that sections 80C of the Income Tax Act make insurance plans eligible for tax exemption. You can avail tax benefits for investment upto Rs 1.5 lakh. So go ahead, buy a life insurance to plan your finances well for family’s secured future.
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