life insurance policy
Most will remember the State Life ad that aired in the early 1990s, in the mid-second decade of his life, showing a little girl playing with her father. Then the girl's father disappears, after which the family remains grateful to him for taking out a life insurance policy. This ad was very popular but it did not answer an important question: what is life insurance? And most importantly, should you insure?
The second question depends on your personal financial situation. But when deciding on an insurance policy, it will be very helpful for you to know how life insurance works and what the different types are. Especially when people are knocking on your door and trying to sell you life insurance, you may find this information helpful in understanding their motivation.
The basic premise of life insurance is: Most of us have financial responsibilities for our families that we plan to fulfill in our lives, especially those with children, elderly mothers. Fathers or other dependents live. But what if you die before you can fulfill those responsibilities?
- But life insurance provides financial protection to your loved ones after your untimely death by giving a large sum of money so that when they are in the grief of your untimely death then at least financial loss due to insurance. Will not be
- Let us show you how insurance works. Suppose I am a 29-year-old healthy, non-smoking man, going to the insurance company to get a life insurance policy, the insurance company after my age, health, and other information. Should.
- In other words, if I die tomorrow, how much money would I want my heirs to get from the insurance company? Now that I am a young, unmarried man, no one is dependent on me, yes I have a little debt left, then I will choose the amount equal to my total debt for insurance.
- How policies work and how to think about choosing the best policy for you.
Other people can choose the amount according to their needs. Of course, if you have debts, they should be included in the insurance amount. Include the total amount you are planning to save for things like children's education or retirement. Collect these amounts and then look for insurance that is sufficient for that amount.
The insurance company will guarantee that your loved ones will be taken care of, and obviously, you will have to pay a monthly premium for this guarantee. The amount of premium depends on various factors including your age (younger people are charged less than older people), health (smokers are charged more), and which type of policy you are choosing (see further below).
Life Insurance
Very few of the people who take out insurance can die prematurely or at a young age, so the insurance company makes money out of the money in the form of premiums received by all people. Premiums are invested in various sources of investment, such as stocks and bonds. The families of those who die young are paid by lovers of other longevity.
You may also understand why some people are charged less than others. If you are young, you have a lower risk of dying before the policy expires, whereas if you are older, you are more likely to die during the policy term. And if you're addicted to cigarettes, you're probably closer to death than non-smokers.
Now you may be wondering what would happen to my paid lovers if I didn't die young? We now have two different types of insurance: Conventional Life Insurance and Term Life Insurance.
Conventional Life Insurance
In Conventional Life Insurance, you actually pay a premium for two things: first, you ensure your family in the event of your premature death, and second, you have an investment account that covers the entire period. Accumulated funds are collected. If you live to your 60th birthday, you will have the money in your investment account, which can be a good amount.
In Term Life Insurance you pay a very little premium but if you do not die and turn 60 then you will not get anything from the insurance company.
So why would anyone want to choose term insurance? However, the first is that the premium for term life insurance is much lower than for conventional life insurance. If the sum insured is equal between the two types of insurance, you will have to pay Rs.500 / - per month for term life insurance and Rs.5000 / - per month in conventional life insurance.
The second major difference is the structure of the commission. About 75% of the premiums paid in the first year of the Conventional Life Insurance Scheme go to the agent who sold you the policy. From the second year onwards, you start accumulating your capital. 20 years.
Due to differences in the structure of this commission, insurance agents appear to be less willing to sell term life insurance than conventional insurance.
Of course, my point is not to suggest which one is better. My point here is just to tell you what different features these two have. If you want the payout or insurance policy to ensure a refund, agree to use the insurance policy for a money-saving plan and also agree to pay a commission, then you need conventional life insurance. Should be selected. If you just want protection from untimely death and want to use mutual funds and other means to invest, then term life insurance would be the best choice.
So what do you think about the first question: should you get life insurance? So one question you have to ask yourself: "Do you feel lucky in your life ...?"
The purpose of this article is to provide information only about the sources of financial services. This article does not cite its references or sources. Readers should carefully research themselves before making an investment or financial decisions.