Wondering How to Buy Life Insurance?

Life insurance is a contract between you and the insurance company. A lump-sum benefit is paid to the beneficiaries on account of the insured’s death or passing. You can choose between term insurance, whole life insurance, and universal life insurance, depending on your needs.

Your coverage will depend on your life goals, the amount you want to leave for your beneficiaries, and the stage of life you’re in. An annual review is recommended, though.

Seven Reasons why you Need Life Insurance

You can take care of your dependents’ financial wellbeing through life insurance, which is a contract between you and the insurer to pay the death benefit to your beneficiary.

  • For relieving your family from financial burden, like liabilities, funeral expenses, student loans, or other debts
  • To leave behind sufficient money for your family to help them maintain the same standard of living
  • Making provisions for donations to charity, payment of college fees and settling mortgages with the insurance policy proceeds
  • Life insurance policies are a tool for creating wealth, and come with different options for investment
  • To make sure that the transfer of wealth to your beneficiaries is carried out in a tax-efficient manner
  • To plan investments in life insurance so that estate taxes can be paid by your beneficiaries with the insurance proceeds
  • Life insurance can be used as collateral when you are applying for a loan from banks and other financial institutions

Types of Life Insurance

Term Life Insurance

Term plan policy premiums remain unchanged for the entire policy tenure, which could be for 10, 20, or 30 years.

Whole Life Insurance

You are insured for life in a Whole Life Insurance policy, and the premiums are higher than a term plan.

Universal Life Insurance

Though coverage is for a lifetime, the premiums can be raised or lowered, unlike a Whole Life Insurance Policy premium

Fixed Indexed Annuities

A fixed annuity provides a steady income flow during retirement on payment of a single lump-sum premium.

Frequently Asked Questions

Life insurance provides financial protection for your family. It is a promise by the insurer to pay your dependents the sum assured in your absence.
Employer-provided life insurance is a great way to protect your family. You need to apply for it. Though, in most cases, it is carried out automatically.
The corpus that will allow your dependents to live comfortably in your absence will be the goal amount of life insurance you should get.
Death benefits received by beneficiaries from life insurance is tax-free. The accumulated cash values for permanent insurance policies are not taxable during the policy tenure.

Life insurance assures financial protection for your dependents and should be purchased only after determining their financial needs. Your life insurance agent will assess your needs and suggest the appropriate type of life insurance required. The various types of life insurance include term life, whole life, variable universal life (VUL), and universal or comprehensive life policies. Life insurance requirements should be evaluated on an annual basis or when significant life events, like marriage, the birth of a child or adoption, divorce, or buying a house, happen.


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