Life insurance is a contract or form of protection from financial loss that grants your beneficiaries cash benefits in the event of loss of life of the policy holder. When the unexpected happens, life insurance policies can help keep your loved ones financially afloat. Simply put, life brings with it many surprises, both pleasant and unpleasant. By taking a Life Insurance Plan one can ensure that he / she is better prepared to face uncertainties in number of ways.
Picking out the right life insurance cover can be a bit confusing. Firstly, you are selecting an amount for the future, so you must take into account the rising rate of inflation. Secondly, you are preparing for a time when you may not be around, so it is vital to pick a foolproof amount that will leave your loved ones feeling financially secure. While there is no right or wrong amount, it can help to choose at least ten times your current annual income to ensure you are able to tackle inflation and cover your family’s diverse needs. In addition to this, if you have any pending loans, count them in along with their interest, so your dependents are not burdened by your debt liabilities.
Human Life Value (HLV) or Ideal Life Cover is a number that tells the present value of future income expenses, liabilities and investments. The HLV number is taken usually to understand how much money would be required to secure the lives of your dependents with term insurance, in case you are no longer around. For instance, using a rule of thumb where the human life value is estimated at 1 Lakh monthly, a prudent approach to life insurance coverage would be to obtain a policy that is 200 times the monthly income. Applying this guideline, an individual with a monthly income value of 1 Lakh should consider securing life insurance coverage of 2 Crores. This calculation ensures a comprehensive financial safeguard, accounting for the individual's overall economic contribution and providing substantial support to dependents in the event of unforeseen circumstances.
How important is it to plan for the well-being of your family in the case of any unfortunate event?
No one likes to think of such a time, but it is crucial to prepare for the worst of scenarios. A life insurance plan is a critical financial tool that can help you safeguard the financial interests of your loved ones in your absence. Picking a suitable life cover offers your family members the necessary financial cushion to fulfil their goals. It can provide your spouse and children with sufficient funds to carry on with their lives with dignity and offer your parents and siblings financial assistance at a trying time in their lives.
Critical illness insurance is the plan that protects you in the event of a future major illness diagnosis. This type of plan supplements existing health insurance coverage with extra funds that meet the demands that come with critical illness health emergencies.
Critical illness cover and life insurance serve different purposes. Critical illness cover pays out a lump sum upon diagnosis of a health condition defined within the terms of the policy, while life insurance pays out if the policy holder dies within its duration.
A personal accident insurance policy gives you coverage against medical treatment, accidental death, or disability. It is part of a health insurance policy and provides coverage for all medical-related expenses caused due to an accident. It covers hospitalization, treatment, surgery (if required) and associated medical costs. Furthermore, it covers expenses towards permanent or partial disabilities suffered because of accident. In case of accidental death, the nominee gets compensation upto the sum insured.