There is no real need for life insurance when you have just started off your career, unless you have financial dependents. The more compelling need for getting oneself insured at an early stage is for a personal accident and permanent disability cover which covers the risk of accidental death and permanent disability.
That life insurance is a must if you have financial dependents is well established. However, it is also important to review your insurance needs at different stages in life, like post-marriage or when you have kids. Here we are taking a look at some of the stages of life during which you should reexamine your life insurance needs:
Early stage: There is no real need for life insurance when you have just started off your career, unless you have financial dependents. The more compelling need for getting oneself insured at an early stage is for a personal accident and permanent disability cover which covers the risk of accidental death and permanent disability. That is because the likelihood of death from natural causes is too low to require a financially-unencumbered person to take on life insurance. However, if required, one can go in for a whole life insurance plan or any other long-duration plan. The advantage is that at a young age premiums for life covers are quite low as one’s health is generally good.
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Post-marriage: As someone matures and gets married, he needs to take an adequate life cover to protect his spouse and family from the risk of premature death of the breadwinner. At this time some critical illness cover is also required, so as to cover one against any mishappening which may lead to non-performance of job for some time. At this stage, whole life policies and term plans are recommended by financial experts to protect the breadwinner as well as his/her family.
Starting a family: Insurance coverage needs to be reviewed again when you have kids. It is important to make sure that you will be able to take care of your kids financially. As insurance also provides cover for foreseen future expenses such as children’s education and marriage, it’s advisable to go for a suitable plan and take adequate cover for your kids, depending on their future needs. However, do not take a life insurance cover on your child, but on your life instead.
Adding liability: Increase in liabilities also acts as a trigger to go for a larger or new insurance cover. For example, buying a dream house or a car on loans may make you feel good and richer, but that also increases your liabilities, forcing you to seek cover for them. There are several policies today which cover the liabilities of a person and pay all the liabilities if something happens to the insured.
Experts, however, suggest that while taking care of your liabilities, you should also take stock of all your plans and if you have some unmanageable life policies, it is better to junk some low-cover, high-premium policies and take a huge term plan instead to cover your liabilities and additional needs. This way you can save on premium and get some additional cover too.
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Change in lifestyle: A hefty rise in salary/income and the urge to maintain the current lifestyle in the future also induce people to review their insurance needs and opt for a larger cover. As the income grows, one is often induced to look for additional covers to take care of one’s future needs. Sometimes, however, even riders serve the purpose of a separate plan. For instance, if you want to take cover for some lifestyle-related disease like diabetes and critical illness, then riders may prove to be a better option.