One great piece of advice that we humans usually give each other is that clichéd advice about planning ahead. It is indeed a great advice, one that should almost always be heeded to by all as adequate preparations always helps us to tackle future endeavors and challenges in a more efficient way.
Sadly, there are no absolutes in life, nothing is guaranteed, and even the best of plans can fail. Worst of all, even life itself is not guaranteed and the occurrence of the unexpected like death, loss or any other thing of this nature can have a totally devastating effect on families, businesses and incomes. However, there are arrangements called insurance policies that can help to cushion the effect of such occurrences.
What Is Insurance All About?
Generally, in the society today, we hear terms like insurance and insurance policies; for those who might not have a proper understanding of the concept, it is basically a risk management arrangement. The idea is simply to have a contingency in place so as not to lose out totally or have a liability placed on you in the event that the unexpected happens. You can read more about it here.
Basically, there are various types of insurance. The fact is, in our society today, any quantifiable risk can be insured thus, there is health, auto, income protection and even life insurance. It is to be noted that the afore mentioned list is not exhaustive of the various categories available. However, the focus of this write up is primarily on life insurance.
What Is Life Insurance?
It is primarily a contractual arrangement/agreement. This agreement is between an insurer and a policy holder or owner that guarantees that the named beneficiaries of the policy holder benefit in monetary terms when the policy holder dies. The policy holder will usually pay either a single premium in bulk sum, or in instalments over a given period of time.
The reason why people go for this policy is primarily to protect their loved ones from being in a financial mess, should the policy holder become deceased. However, the question for most persons who want to get this policy is; how much life insurance do I need?
Calculating Your Life Insurance
Everyone faces different challenges and is beset with unique situations and will generally have to make decisions based on the reality that they are confronted with. These include issues like financial ability or status, health status, the number of dependents (those depending on the individual for upkeep) etc. The following are some of the things to take into consideration when about to make these decisions.
Who Are You Protecting?
Most times, it is your wife, children and even other close relatives that you may feel responsible for. When you make this consideration, your mind is narrowed to the specific person’s that you have in mind.
How Long Should The Coverage Last?
Again, this is determined by your immediate realities and in this particular instance, age. For example, if your children are still infants, then the time span for their coverage will definitely be longer unlike in a situation where they are in high school.
Is There Anyone With Special Needs?
Another factor to be considered is whether there is any special needs person among those whom you want to be beneficiaries from your policy. The simple reason for this is because, they will generally cost more than the average person.
Are You In Debt?
The financial obligations that you owe should also be put into consideration when about to get this policy. This is because it affects the range and the extent of the coverage that you could give to your intended beneficiaries.
Can There Be An Exact Projection?
Despite the above listed areas to consider, there is no exact way of determining what your dependents would need in the event of your demise. But there are ways to make projections on what it might take. One such option is to calculate based on certain personal indices what might be needed with a life insurance calculator App.
It just so happens that the unexpected sometimes occur and ruins our plans. Such occurrences might set us back in more ways than one and may even make us miss out on the things that we hoped to achieve.
But with proper planning, one can cut back the costs of some of these unexpected happenings. And though death is final, its financial impact in a family can be cushioned.
Also read: Why you need advantage health plans?