Things that you should know about Life Insurance
A life policy is vital as part of a financial plan, especially if you are the breadwinner of a family. For a small premium each month you will get vast peace of mind for your family will be financially protected if you die.
Your family must know about the policy and where you keep it. Update your policy if there are life changes eg. divorce, death of a beneficiary or new addition to the family.
To change the beneficiary on a life policy you can’t only change your will. The insurance provider has to be informed to alter the policy details. A policy overrides a will.
The standard amount of cover is ten times your annual earnings plus debt. Though this is a rule, rather ask an expert to determine the cover you need.
Not only breadwinners need cover. A home maker provides a valuable financial contribution to the family. Both spouses should have life insurance policies.
Not everyone needs life insurance. If you are young and without dependents, you may not need life insurance, but it is good to buy cover if you are planning on having dependents.
Premiums for a life insurance policy are determined by your age, gender and risk classification.
Ways to determine Life Insurance cover
Your age and earnings are considered. Starting with your age, determine how many years of income you will need to replace in the event of your death.
Your particular situation is considered to assess the impact of your death on your dependents. Factors included are whether your spouse will continue or start to work, the number of children, a mortgage to pay off and the cost of educating your children.
Type of insurance cover :
Two basic types of Life insurance are term and cash-value insurance or permanent insurance.
Term insurance has no investment section. You decide how much coverage you need and the period that coverage should remain in effect. A level premium over the term of the policy, is possible. Term insurance has lower premiums than cash-value insurance. It is recommended to invest the difference. Unfortunately, most people spend it.
Term insurance will provide the highest coverage for the lowest premium. At the end of the term, the need for insurance may be reduced or abolished.
A comprehensive study was done last year and it was revealed that 100% of people die. Everyone needs cover at some stage of their lives.
This post originally posted on http://www.dial-direct.co.za/ and reposted with permission.