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With all of the uncertainties of life, particularly in the turbulent financial markets, it is essential for business owners to have life insurance. However, choosing the right life insurance plan is every bit as important as having one in the first place.
The life insurance plan you choose establishes the level of support that you would receive in case your health declines. However, it can also be the wild card you might need for your financial map. What’s more, there are other benefits to having the right life insurance plan. However, the most important benefit of a life insurance plan gives is the financial support that your family would receive in the event of your untimely demise.
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Make your choice of a life insurance plan after assessing your current and anticipated income. In other words, choose your life insurance plan on the basis of your medical state, your financial portfolio, and your age. Moreover, be mindful of your ability to pay the premiums now and in future. Further, consider the following factors when choosing life insurance:
The cost of a life insurance plan can vary due to many factors. These include what is covered under the policy and what’s not. Therefore, make sure that every bit of the cost you pay is justified by the benefits you will receive under the policy. In simple words, it is important to strike the right balance between the benefits and the cost of a life insurance plan.
Moreover, ensure that your life insurance plan covers all your dependents. Also, ensure that your policy provides coverage against major health-related issues.
Additionally, when you’re choosing a life insurance plan, it is important to understand the various types of life insurance plans that available. You’ll want to choose the plan that best suits your needs. For example, would you you prefer to buy a pure life insurance plan or one that comes with investment benefits?
The four most important types of life insurance plans are as follows:
Term Life Insurance Plans
Term plans or term assurance plans are life insurance plans that provide life coverage for a specified period of time.
An endowment plan is another kind of life insurance plan that ensures a payout in the form of a lump sum post maturity or in the event of the policyholder’s death, whichever happens earlier.
Unit-Linked Insurance Plans
This type of life insurance plan provides for coverage wherein the value of the policy varies from time to time based on the value of the plan’s principal assets at that point in time.
Unlike a usual endowment insurance policy, in which the survival benefit is payable after the endowment period is over, a money-back policy offers cyclic payment of the survival benefit in parts throughout the policy term.
Comparing the Types of Plans
When comparing between these plans it is important that you keep in mind the factors we discussed earlier.
Moreover, you’ll need to recognize the financial needs of your dependents. This will allow you to ascertain the level of life insurance coverage that you need. The basic rule is to opt for a plan that provides for at least ten times your income. However, the amount might vary based on how you intend to use that sum.
Basically, you need to settle on an amount that you want your dependents to receive in the event of your death. Your premiums will be determined from that amount. Therefore, compare various life insurance plans and make your choice among them accordingly.