It springs no wonder that being a responsible person, you will purchase a life insurance policy so that your family never experience financial insecurity after you breathe your last. The family members who heavily depend on your earning will not have to struggle hard to survive. Life insurance is a guarantee that the nominee and other close members in your family will live a comfortable life even after your demise.
Most of the people think that buying an insurance policy is enough to protect their family. But the fact is whether you get right amount of protection or not depends on the coverage you get through a policy. The first factor to consider before making a purchase of insurance policy is how much money will keep your family in comfort. Every family has a certain living standard. It is very important for you to ensure the same living index – if not better – for your near and dear ones. If you have kids, then you need to calculate how much money will be adequate to cover the expenses of higher studies. If your spouse has any serious physical problem, you need to estimate the medical expenses. All these factors go into budget making. Only when the final estimation of future expenses is done, you should go for insurance shopping.
Protection through Term Life Insurance
Term insurance policy, unlike the whole life insurance, provides coverage only for an agreed time period. As your primer objective is to arrange a good amount of money for your family members so that they can comfortably manage household expenses and make payoff for the house without you, it makes sense to decide a term that covers the repayment period.
Make a Balance of Coverage & Cost
An insurance policy is not always expensive. The cost of a life insurance policy is guided by several factors. If you want a wider coverage, it will cost you a heavy fortune. It is better to ask for quotes. This way, you can compare the available policies and understand which factors actually influence the cost factor. It will also enable you to balance cost and coverage. Finding an affordable insurance scheme is not difficult if you put in some earnest effort. www.suncorp.com.au provides an assortment of offers to fit every pocket and need.
Rate of Inflation – Must-Consider
Level of inflation does not present a static figure. It has a dynamic character. So when deciding about an insurance plan, you must consider how much impact inflation will leave on your earning. Due to hike in inflation rate, the cost of living goes up. So, you must assess how much money will be required to ensure the same quality status of living.
Benefits of a life insurance policy
1. Tax benefit
Every people will make every effort to pay as little as possible to taxes. By taking out a life insurance policy (branch 21) you can get an interesting tax benefit. For example, under certain conditions, you can deduct the premium of a branch 21 life insurance policy under the system of building or long-term savings. The payment of the life insurance policy will then take place at the statutory retirement age to the beneficiary. This will be the policyholder himself if he or she is still alive at that moment. As a policyholder, however, you are not obliged to include the premium of the life insurance policy in your tax return. If you do not do this, the amount of money paid will also not be taxed.
A life insurance policy provides a number of different guarantees. For example, you can include a so-called death cover, but also save for a supplement to your pension. In addition, there is the possibility to take out a guarantee for disability. Such a guarantee will provide an interest at the time that you become incapacitated for work.
3. Succession regulation
With a life insurance policy you can designate a specific beneficiary. This allows you to pass on a portion of your estate to a specific person. You always have to pay attention to what you are doing and good advice from an insurer or a notary is of enormous value in this case.
Disadvantages of a life insurance policy
1. Premium tax
A premium tax of 1.1 percent is levied on the premiums you pay for a life insurance policy. This percentage is valid for a type 21 and branch 23 life insurance. However, you do not pay a premium tax of 1.1% on branch-26 insurance, but you must pay a withholding tax on the achieved return. Such a withholding tax does not have to be paid in case of branch 21 insurance, provided that the contract of the life insurance policy is longer than 8 years, or you have taken out a death cover of 130 percent in the insurance contract.
However, a life insurance policy also entails the necessary costs. Such costs include the so-called entry costs, the commission charged to you by an intermediary, any costs related to the management of the insurance and exit costs. However, an insurer can compare the costs of different insurance companies and thus find the cheapest insurance for a personal situation for a provider.
A lot of people are still convinced that a life insurance policy is only a policy that pays a sum of money when the insured person dies. However, a life insurance policy has many more benefits. We have listed a number of advantages and disadvantages of life insurance for you above.