The pain and grief of losing a family member can be pretty distressing and heart-breaking. However, what’s more, difficult is that the family gets into a big financial crisis when their bread earner leaves them behind. Hence it is imperative to understand the worth of a life insurance policy and purchase it at the earliest to seek protection against any such unfortunate event.

What is a life insurance policy? Why should you purchase one? How can you buy a life insurance policy? Which life insurance plan best suits you? If these questions are hitting your mind, then here is a quick guide that will help you navigate through the basics of a life insurance policy:

What is a life insurance policy?

A life insurance policy is an agreement between the policyholder and the insurance provider that promises the policyholder financial coverage in exchange for timely payments of the premiums as mentioned in the policy. It is a policy that helps secure your family’s future and offers death benefits to your chosen beneficiaries during the contract. An untimely death can raise financial concerns if you are the only breadwinner for the family. And, your family may end up in a real crisis if you leave them behind without enough bank balance in your account. But all thanks to the life insurance policies that prevent such a situation and provide coverage to the policy holder’s beneficiaries.

Reasons to buy a life insurance policy

Buying a life insurance policy offers numerous benefits to policyholders and their families. Here we pen down a few of them:

Coverage and risk mitigation

One of the primary reasons people buy a life insurance policy is because it offers financial coverage to the survivors after the policyholder’s death. By purchasing a life insurance policy, you safeguard your family and prevent them from falling into a financial crunch.

Saves tax

Another reason why life insurance policies are imperative is the additional benefit it offers to the policyholders by providing a rebate on the income tax. Yes, you have heard it right! You get to attain tax benefits and can claim tax exemptions based on the jurisdiction of the laws and rules that govern the purchase of life insurance policies.

 Health and medical expenses coverage

Most life insurance policies also cater to medical expenses if the policyholder falls prey to any sort of disease or illness. Thus, it helps save you in case of a financial emergency arising from any medical reasons.

Loan provision

Not just coverage, some life insurance policies also help you get a loan by placing your policy as collateral. So, if you are looking for some urgent funds for any reason, a life insurance policy can help you get a loan sanctioned quickly.

A guide to buying a life insurance policy

The above reasons must have made you believe that you should purchase a life insurance policy. But how do you buy a life insurance policy? Here we have sorted out the steps that you need to follow to buy the best life insurance policy:

  • Chalk down your needs: To buy a life insurance policy that suits your lifestyle, you first need to figure out the debts you have in your name and your expenses, including your monthly and futuristic expenses. Once you are done with this, you also need to calculate the replacement income and an amount your family will need just if you are not there to take care of your family.
  • Ask for quotes: After determining your needs, comes the research process wherein you should ask for quotes from different life insurance policy providers. Further, it would help if you compared the different quotes, life insurance plans, and their offerings to pick on the most suitable plan according to your needs. While picking on a company, make sure that you choose a company that holds a good reputation and financial rating to fetch good value for your policy.
  • Meet the agent: Once you finalize a specific insurance provider, meet one of their licensed agents to discuss things in detail.
  • Ensure your affordability of paying the premiums: Check the amount of income you generate, your expenses, your savings, work out the maths, and find out whether you can afford to pay the premiums for the insurance policy you are planning to buy.
  • Read the terms: Later, when you purchase the policy, carefully go through all the rules and terms. If you do not like the policy and are not satisfied with the same, you can consider canceling it. But you need to remember that a stipulated period allows the policy buyer to cancel the policy. Hence, make sure you cancel within the given period to receive a refund.

Conclusion

A life insurance policy is no less than a safety shield that extends financial security to your family members. Therefore, one should necessarily purchase a policy to favor their family members who may land in a sheer state of disaster if no one is to cater to their requirements. We hope that this guide throws light on a few basics of life insurance policy and motivates you to buy one at the earliest. So, what are you waiting for? Get in touch with the licensed agents now and buy the best life insurance policy that suits your needs!