Tips On Getting The Right Life Insurance Cover
To be guided on the decision of which life insurance cover you need there are some factors that must be considered.
Establish the cover amount you need. Some people may not require the assistance of a financial adviser to calculate the cover amount needed. For better explanation and calculation we shall not factor in inflation, time and money value.
It is good to consider if there is any financial requirement that has to be paid off in case of any unfortunate incident like permanent or total disability or premature death or terminal illness. Those that in the list of what should be paid off include mortgage loan repayments, business or personal debts among others.
Establish if there is anybody who is financially supported. Aged parents, kids or a spouse are all in this category. It is necessary to plan how to continue with the support of kids, the spouse or parents in case of an unfortunate event. One such example could be when a person has purposed to support their children or aged parents for a period of 20 years the annual amount being approximately $20,000. $400,000 is the sum assured which will be required at this time.
If a person who has taken the insurance life cover meets with an unfortunate incident it is good to establish if there is any financial gift to be given. Sometimes there are people who would like to give some financial gift when they are deceased. Sometimes a contribution to a charitable organization. Factoring the above will help a person to decide the type of life insurance cover they would want to take.
To tackle income replacement you notice that there are tricky questions on this issue. The reason why this question not to be straight forward and so is the answer is the wrong estimate of a person’s total income growth rate. However there is a thumb rule for this and that is it is important to know the number of years that your income is to be replaced. By example, if the income replacement is ten years, the sum assured will be $500,000 that is if your current salary is $50,000. It will as a result be possible to make a $50,000 per year for ten years.
The market offers various insurance covers all of which are good but before you can decide on the one to take it is important to know the type of insurance cover that you need. Calculating the insurance premiums is through knowing the sum insured and coverage length and this is all good but ability to pay the premiums should be taken into account.
This deliberation is a guide or a represention of the insurance market and the intention of this discussion is just for information. An insurance adviser should be sought so that they can offer financial or insurance advice.