Most people do not like to think or talk about death, but that doesn’t change the fact that it comes to everyone eventually. Life insurance is as much a part of a complete financial plan as paying taxes or saving for retirement. The right life insurance policy will give you peace of mind if the unthinkable ever does occur, but navigating the insurance options can be daunting. Let’s start by answering these two questions: Do you need life insurance now? What type should you buy?
Do you need life insurance now?
Yes, you probably do need life insurance now. Life insurance provides a financial safety net for anyone that depends on your income. If you have a spouse or dependents, life insurance will allow them to pay the mortgage or save for college even without your income.
Stay-at-home parents are an oft-overlooked group when it comes to life insurance. Even if you do not currently have an income, how will your family replace the service you provide? Life insurance will help pay for childcare or to hire out the other household responsibilities performed by the stay-at-home parent.
Even if you are single with no dependent children, life insurance can be used to pay your debts after you die. That way, your parents, heirs, or business (if you own one) will not have to sell your home or possessions to paying off your debts for your estate to clear probate.
What type should you buy?
Once you’ve decided that you do need to purchase life insurance, the many options may seem overwhelming. Before you commit to a policy, you will need to choose between whole and term life insurance.
Whole life insurance includes a built-in savings account you can borrow against throughout the life of the policy. Universal life insurance, a variant on whole life insurance, is similar in this regard. Whole life insurance is also valid for as long as you pay the premiums—it never expires or ends. The downside to whole life insurance is that you will pay higher premiums to build up the associated savings.
Term insurance, on the other hand, is usually the least expensive and simplest life insurance option. Each policy lasts for a set number of years (usually 10, 20, or 30 years) and has no added benefits or expenses than simple life insurance. Term life insurance is less expensive than whole life policies and allows you to purchase insurance for as many years as you need it. For example, you might choose to purchase a policy that covers all the years you will have dependents living at home or until your personal or business debts will be paid off.
Life insurance is one of the most important forms of insurance you will ever buy. It is a gift to those you will leave behind. If you have questions about your specific situation and how much coverage you need, contact an insurance broker you can trust to discuss your individual needs and financial obligations.
About AEGON Life
Launched in July 2008 with pan-India operations, AEGON Life Insurance Company Limited has a vision to be the most recommended new age life insurance company. As a joint venture between AEGON – world’s leading financial services and Bennett, Coleman & Company – India’s leading media house, AEGON Life Insurance adopts the power of global expertise to facilitate a direct to customer approach, leveraging digital platforms to bring transparent solutions, and to prioritize customer’s needs. Our product portfolio includes term life insurance plan, pension plans, unit-linked insurance plans (ULIPs), health insurance plans, child education plans, and more.