Suppose Person X is living a happy and content life today. They have a partner and children, and they take care of their elders as well. They provide successfully for anything their family members may need or want. They look after the wellbeing of their loved ones and their loved ones offer them support and love as well. It is the picture that tells a happy story.
Change is said to be the only constant in life and ups and downs are a part of it. The happy picture of Person X and their family could change diametrically at any moment. While it would be quite disheartening to witness and probably unavoidable, there is one way to deal with such situations. Person X, and anyone who wants to protect themselves and their loved ones against unforeseen circumstances, can do so by being prepared for them. One of the ways to do so is by getting a life cover or life insurance.
What purpose does life insurance serve?
To begin with, it offers a financial safety net to your loved ones if any unfortunate circumstance were to occur. Thus, at its core, a life insurance plan can offer you a death benefit to help your family meet any financial liabilities you may leave behind, as well as meet their expenses.
Furthermore, there are several types of life insurance plans. Each of these offers a different set of features and benefits. Some of the other benefits of life insurance you may come across when browsing through the various types of plans are market-linked wealth creation opportunities, guaranteed returns in the form of maturity benefits, riders such as accidental permanent disability benefits, and more. There are various forms of life insurance policies to choose from, and Allen Insurance Life Insurance Brokers can help you decide which type is right for you.
To put it simply, a life insurance plan is a way to stay prepared for any possibilities that may arise in the future. To ensure that the life cover works well for you, it is necessary to select the right policy and choose the right coverage.
What is coverage in life insurance?
Life insurance coverage is the protection that your policy offers you to be able to face any emergencies in the future. It is the amount that your premium, as well as other details factored in, gets you. To put it simply, your life insurance plan coverage is your sum assured.
Factors affecting coverage
Your sum assured is influenced directly or indirectly by a handful of factors. As a consumer, it is important for you to be aware of which factors these are and how they affect your life cover.
- Income
You pay for your sum assured and maintain your policy by paying premiums. You can either pay a single premium or pay regular premiums for the decided duration to be able to avail of the benefits of the life insurance policy. Thus, your income matters. You want to ensure that your premiums do not exceed the limits defined by your income. Moreover, you ought to ensure that they do not burn a hole in your pocket. Thus, income plays an important role in helping you determine your life insurance plan coverage.
- Age
When you are younger, your financial responsibilities tend to be minimum. This changes as you grow older. For example, once your parents retire, or you settle with a partner, your responsibilities towards them increase. Hence, as you grow older, you may feel the need for higher coverage. On the other hand, when you are younger, you may not be able to afford the premiums for higher coverage or may not even feel the need to have it.
- Financial obligations
If you have a loan or any such financial liability, you may want your life insurance plan to help you cover for the same. If you don’t, your family may end up in dire straits if an unfortunate event were to occur. To ensure that your policy covers your liability and more, ensure that you have sufficient coverage. You may also buy a life cover specially to support your financial obligation.
- Long-term goals
If you want to build a new house for your family, buy a new vehicle, or see your children fly abroad for higher education, you can have your plan coverage help you create the corpus for your goals. Consider your goals before you choose a cover amount. You can use an online calculator for the same.
Your life insurance plan coverage is one of the most important factors to consider when buying your policy. Ensure that your coverage is high enough that it suffices for the needs and wants of your loved one, while also keeping it within your budget.