Calculating your needs before policy purchase is crucial

Posted by Ritika Shah on July 18th, 2016

Planning is always better than last moment hassle. We plan for various occasions in life such as anniversaries, birthday parties,  child’s marriage, child education, etc. but planning for family's future is equally important. Infact, future planning comes first, it is only after you plan well for the future you’ll enjoy the true essence of your day-to-day socializing. An individual who has to undertake responsibilities for their family has to prepare financially for an untimely death.

While there are lots of financial products available in the market, insurance plans are sure to offer you better returns and secured future life. It is the protection plan which promises a certain pre-defined amount of money to the plan holder's nominees, if the insured person dies within the term of the plan. However, the amount that needs to be insured for can’t be a magic number out of a lucky draw. It has to be drawn upon with much calculation and consideration with practical expenses in life.  The article guides you through some points which can be considered while using a life insurance premium calculator to know about the amount of cover required for your family security.

Using life insurance calculators will help you decide how much life cover you need. It figures the amount of investment capital your family will require in your immediate absence and also provide future income to sustain the household. 

In today’s time commission agents will always try to sell any irrelevant policies to customers just to earn their commission. Instead, using insurance calculators you will get an unbiased estimate by answering a few basic questions. Your exact future needs meeting your various requirements will be forecasted in front of your computer screens.  An amount of insurance cover is determined on various factors like age, lifestyle, occupation, place of living, family responsibilities, loan amount taken and financial securities in hand.

You will have to pay a premium towards your policy at regular intervals or as a lump-sum to an insurance company in order to keep your insurance policy active. The amount of premium varies for different policy holders. A general thumb rule is, higher the risk, higher would be the insurance premium. Here are few essential tips to work upon your policy using a life insurance premium calculator:

Age

Your age plays an important role in determining the amount of cover. When you buy a policy at a younger age, you’re healthy and fit which helps you get a policy with lesser premium, no medical check-up and the money also grow based on compounding effect. But as you get older, you may be prone to major diseases and health problems. Hence, at a higher age, the risk increases and consequently your insurance premium will also go up.

Lifestyle

Your living standards play a significant role in determining the premium for your insurance cover. Take all factors into consideration while using a life insurance premium calculator including your habits like smoking, drinking or consuming tobaccos which increases the possibilities of health disorders. The premium amount for individuals leading such a lifestyle is higher but it will provide you a relevant solution to counter the issues in near future.

Profession

Most people tend to hide their occupation as matter of embarrassment, but this will eventually lead to wrong policy purchase that will give shorter coverage to your family. Many industries like oil and gas, rigs and refineries, mining, fisheries, etc. have risky working condition. So the premium will be slightly higher than that of a person in a corporate set-up. But don’t hide to save insurance costs.

Policy Type

Group insurance policy is beneficial for the company as well as the policy holder. The policy risk is uniformly spread, which minimizes the chances of loss for the insurance company, and ensures more security to the policyholder.  The premium of a group insurance policy is always lower as compared to an individual plan.

Honesty is the best principle, while using life insurance premium calculators. The point is, if you try to hide any of the information which is determined later, chances are that your policy might lapse or your beneficiaries may get shorter cover. People buy policies to get enough safety to their family in their absence, so sharing right information is important part of policy purchase.

Source: http://youknowitbaby.com/article/12981/calculating_your_needs_before_policy_purchase_is_crucial.html