What Is Insurance
When it comes to good financial planning, one must ensure that all potential future risks are covered. That is where Insurance comes into picture. It is the key to good financial planning and is an important risk management tool. In very simple language, it is financial planning system where you pay an insurance company some amount of money periodically called premium, to ensure that they would step in and provide you or your family monetary help in difficult times. Of course, there are certain terms and conditions that should be fulfilled before you can benefit from this financial tool.
The person who buys insurance from an insurance company is called the insured and the provider is called insurer. When buying an insurance policy, the insured have to agree to the terms and conditions laid down by the insurer and hence, a contract is formed. There are various types of insurance like life insurance, property insurance, liability insurance, etc. It allows individuals, businesses and others to protect their future against unknown future hardship or calamity of huge proportions, at a reasonable rate. So, you get an idea that if a person is investing in an insurance policy, the potential loss would be a significant one. Insurance makes sense only when the insured thing is valuable.
Let’s understand this with the help of an example. Say, you are the only earning member of your family. So, if something untoward were to happen to you, your family would be in great financial hardship. It would be extremely difficult for them to cope with the difficult times without any financial help from outside. So, if you had invested in life insurance for yourself, it will save your family a great deal of trouble. The insurance company will step in to replace your income based on the premium you had paid to the company. The same principal applies to property insurance, health insurance or any other form of insurance.
Insurance is designed to help you monetarily in the most difficult and traumatic times of your life. You might consider buying an insurance policy for several reasons. A few of them are mentioned below.
To provide for and protect your family in case of the death of a sole bread winner.
To ensure that your debts are covered after your death.
To protect your business against unforeseeable problems like damage from fire, floods, etc.
To protect your home from theft, burglary, etc.
To provide for unforeseeable health expenses.
To protect yourself in case of a disability.
To protect your valuables like car, expensive gadgets, etc.
One can never be sure of what the future holds for them. So, it is always better to get appropriate insurances. But, one should understand that the market is filled with numerous insurance policies. You should research well and find out what is best for you.
Life Insurance
Life is full of uncertainties and one knows not what will happen in future. Of course, most of us will want to die at a ripe old age and leave behind abundant wealth for our family. But, life can take any unexpected turn at any moment and all the hopes and wishes can be dashed in a moment. Life insurance is there to provide for your family in case of your untimely demise. Well, it is not a very welcome or happy thought, but the sole reason behind the concept of life insurance is to provide you the peace of mind that in case of such an unfortunate eventuality, your family will be taken care of.
When you buy a life insurance, you have to pay premium as decided by the type of policy you are choosing. It can be monthly, quarterly or on an annual basis. The term of life insurance can be as short as a year or it can span over a life time. When one dies within the term of the insurance, your nominated beneficiary will receive the insurance amount.
People opt for life insurance for a number of reasons. It can be to reduce risk exposure of debts, for repayment of debt after death, provide for the family for the family after one’s demise, and pay for the funeral or to secure the future of the children, etc. If you are a business owner, it becomes essential for you to have a life insurance as your death can have long lasting financial implications.
Life insurance is risk management financial tool and should not be considered as a saving tool. Before buying a life insurance policy, you need to ask yourself if you really need it.
Who Needs A Life Insurance?
Ideally a person who is single and has no dependent doesn’t require a life insurance. This is because life insurance is not meant to insure the person but to help his family after his death. But, if you have a family or any dependents, then you should definitely consider buying a life insurance policy. So, if you decide to get yourself one ask yourself these questions.
Do I really need life insurance?
How much it will cost me?
How long it will cover me?
What type of policy should I go for?
The needs of life insurance may vary from family to family. You should take into account various factors like your income, expenses, savings, family goals, etc. As a rule of thumb, go for a policy coverage that is equal to 6 to 10 times your gross annual income. Well, it is just a rough idea and you can customize it as per your family needs.
Life insurance companies have various requirements and they take into account various factors like your age, sex, health, medical conditions, family history of medical conditions, your smoking habits, etc. Taking all these factors into account your premium will be decided. Many insurance companies don’t cover suicide or suspicious death situations. So, one should for buying it only after evaluating the various pros and cons of it.
When it comes to good financial planning, one must ensure that all potential future risks are covered. That is where Insurance comes into picture. It is the key to good financial planning and is an important risk management tool. In very simple language, it is financial planning system where you pay an insurance company some amount of money periodically called premium, to ensure that they would step in and provide you or your family monetary help in difficult times. Of course, there are certain terms and conditions that should be fulfilled before you can benefit from this financial tool.
The person who buys insurance from an insurance company is called the insured and the provider is called insurer. When buying an insurance policy, the insured have to agree to the terms and conditions laid down by the insurer and hence, a contract is formed. There are various types of insurance like life insurance, property insurance, liability insurance, etc. It allows individuals, businesses and others to protect their future against unknown future hardship or calamity of huge proportions, at a reasonable rate. So, you get an idea that if a person is investing in an insurance policy, the potential loss would be a significant one. Insurance makes sense only when the insured thing is valuable.
Let’s understand this with the help of an example. Say, you are the only earning member of your family. So, if something untoward were to happen to you, your family would be in great financial hardship. It would be extremely difficult for them to cope with the difficult times without any financial help from outside. So, if you had invested in life insurance for yourself, it will save your family a great deal of trouble. The insurance company will step in to replace your income based on the premium you had paid to the company. The same principal applies to property insurance, health insurance or any other form of insurance.
Insurance is designed to help you monetarily in the most difficult and traumatic times of your life. You might consider buying an insurance policy for several reasons. A few of them are mentioned below.
To provide for and protect your family in case of the death of a sole bread winner.
To ensure that your debts are covered after your death.
To protect your business against unforeseeable problems like damage from fire, floods, etc.
To protect your home from theft, burglary, etc.
To provide for unforeseeable health expenses.
To protect yourself in case of a disability.
To protect your valuables like car, expensive gadgets, etc.
One can never be sure of what the future holds for them. So, it is always better to get appropriate insurances. But, one should understand that the market is filled with numerous insurance policies. You should research well and find out what is best for you.
Life Insurance
Life is full of uncertainties and one knows not what will happen in future. Of course, most of us will want to die at a ripe old age and leave behind abundant wealth for our family. But, life can take any unexpected turn at any moment and all the hopes and wishes can be dashed in a moment. Life insurance is there to provide for your family in case of your untimely demise. Well, it is not a very welcome or happy thought, but the sole reason behind the concept of life insurance is to provide you the peace of mind that in case of such an unfortunate eventuality, your family will be taken care of.
When you buy a life insurance, you have to pay premium as decided by the type of policy you are choosing. It can be monthly, quarterly or on an annual basis. The term of life insurance can be as short as a year or it can span over a life time. When one dies within the term of the insurance, your nominated beneficiary will receive the insurance amount.
People opt for life insurance for a number of reasons. It can be to reduce risk exposure of debts, for repayment of debt after death, provide for the family for the family after one’s demise, and pay for the funeral or to secure the future of the children, etc. If you are a business owner, it becomes essential for you to have a life insurance as your death can have long lasting financial implications.
Life insurance is risk management financial tool and should not be considered as a saving tool. Before buying a life insurance policy, you need to ask yourself if you really need it.
Who Needs A Life Insurance?
Ideally a person who is single and has no dependent doesn’t require a life insurance. This is because life insurance is not meant to insure the person but to help his family after his death. But, if you have a family or any dependents, then you should definitely consider buying a life insurance policy. So, if you decide to get yourself one ask yourself these questions.
Do I really need life insurance?
How much it will cost me?
How long it will cover me?
What type of policy should I go for?
The needs of life insurance may vary from family to family. You should take into account various factors like your income, expenses, savings, family goals, etc. As a rule of thumb, go for a policy coverage that is equal to 6 to 10 times your gross annual income. Well, it is just a rough idea and you can customize it as per your family needs.
Life insurance companies have various requirements and they take into account various factors like your age, sex, health, medical conditions, family history of medical conditions, your smoking habits, etc. Taking all these factors into account your premium will be decided. Many insurance companies don’t cover suicide or suspicious death situations. So, one should for buying it only after evaluating the various pros and cons of it.
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