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Life Insurance and Life Insurance Calculator- How to Use

By PolicyBazaar

Buy a term plan and secure your family

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Financial experts claim that you need a particular amount of life cover depending on the simple thumb rule (generally 7 to 10 times your yearly income).

The people selling insurance have incentives to earn so they show “the more, the better”. However, what is the truth exactly?

A life insurance calculator helps the people in knowing exactly the amount of sum assured they require depending upon the specifics of the personal condition of the insurance seekers so that you do not over-pay or under-buy.

The honest situation is that person is unique. General thumb rules are not accurate and the insurance commission salespersons are inherently biased for selling the customers more than what is required.

You can make use of this life insurance calculator to receive an accurate amount that you can trust. In this article, there are additional details regarding life insurance policies for helping you in making a well-informed and smart buying decision.

What does life insurance mean?

Life insurance makes payment of an amount of money either on the demise of the insured individual or after a certain time period. This is used for funding the future requirements of the surviving family after the untimely demise and leads to the loss of an income.

You can purchase life insurance by making payment of the annual, quarterly, or monthly insurance premium for a certain number of years for receiving a definite benefit as pre-defined by the contract for life insurance.

While making calculations for your life insurance requirements, the objective is to purchase a sufficient amount to make payment for your instant funeral costs and still offer an adequate investment capital for financially safeguarding your dependents once you are not around.

Who all need a life insurance policy?

Not every person is in need of a life insurance plan. Usually, life insurance policies are bought by people who have dependents who need continued financial support in case you pass away unexpectedly leading to income loss.

The dependents can be your children, spouse, siblings, or parents who rely on you financially. In case you are a single individual who does not have any dependents, you might consider buying life insurance for covering your funeral costs or leaving a legacy to the chosen charity. This is comparatively less common.

One common need for a life insurance policy is providing financial safety for the dependents in case the primary breadwinner passes away prematurely.

Your life insurance plan takes the place of the “financial value” that you held in your family. When you are gone, you would want your loved ones to get sufficient funds for supporting them till the time they become capable of taking care of themselves. It is the responsible thing to do this on your part so that your loved ones do not end up indigent.

One point that can be overlooked frequently is that you might not require to provide for your family in perpetuity. The dependent kids would not be able to take care of themselves after their college and your partner might marry again or launch a new career path.

You wish to buy enough time for them to heal, grieve, and make out how they can lead their lives constructively without your presence.

The main idea is purchasing sufficient life insurance so that they can do all that they want in their lives. However, you should not purchase so much that they do not need anything for their living. There has to be a balance.

What are the benefits of life insurance?

In case of the demise of the policyholders, their kids will just have one parent remaining. The last thing they would want is for their children to lose the support of the other parent due to their commitment to full-time employment. Therefore, the family has a sufficient amount of funds for surviving.

Life insurance cover allows the surviving spouse an adequate amount of time for focusing on the kids, and not their job. Your spouse will not be desperate financially so that he or she can take enough time in rebuilding her life without making all the decisions depending on their financial desperation.

Making use of the life insurance calculator for simple calculations

The good thing about this calculator is that it makes the calculation process for the amount of life insurance cover you need very easy. You only to complete a few easy steps and the calculator will do the rest of the calculations for you.

Although there are various factors to be taken into consideration, this calculator will provide you with only the essential inputs for assessing the suitable amount of life insurance cover required for your particular situations.

Generally, the life insurance calculator will figure out the amount of sum assured that your family needs for sustaining the present spending level after making payment of the instant costs related to your demise.

This means that the beginning point is knowing that how much funds your family needs every month for supporting their present lifestyle. All this is not rocket science, so you just need to follow the steps built into the calculator & it will simply do the calculations for you.

Where can you buy life insurance in the UAE?

Now that the life insurance calculator gives you an estimate of the life insurance coverage needed, the next thing that you need to know is where to purchase the life insurance from?

Not all the plans are the same, so you would want to consider the different alternatives before buying your life insurance plan.

An ideal insurance salesperson can assist you in finding a suitable insurance plan customized to meet your needs. Go through the policy properly so that you can understand all the charges for purchasing a new plan, terminating the existing life cover, and any other charges that are related to it. The main problem lies in the details of the plan. It pays to become an educated customer.

You also need to make sure that you go through the financial ratings of the insurance company before purchasing the life insurance plan so that you can be confident that they will remain in business and be capable of paying when the time comes for collection.

What is the simplest way of getting a quote?

In case you do not have the time or will of going through the work for finding a good salesperson, there are many famous websites that allow you to compare different plans and even purchase directly. It is free, in terms of both cost and risk, and it takes very little time to get the insurance quotes.

There is no hype regarding the salesman, they get to shop from above a dozen providers across the whole insurance industry. Moreover, the quotes will include first-class rating details so that they are accurate.

Some shopping tips for life insurance

Here is a list of tips for buying life insurance in the UAE.

  1. Reducing the policy term. The longer the tenure of the policy, the more expensive would the policy be.
  2. Consider buying a term life plan because it is generally cheaper than a permanent life insurance policy.
  3. For couples, buying a joint life plan is a better option. It is more expensive as opposed to a single plan, and will also include a greater amount of cover.
  4. Buying a life insurance policy while you are young will always be better. The older you become, the higher would be the insurance premium amount.
  5. Always lead a healthy lifestyle. The insurance companies will calculate the amount of premium by assessing your weight, age, lifestyle, and other such factors.
  6. Do the calculations properly on the life insurance calculator and compare different insurance quotes. Become a smart buyer.
  7. Disclosing the present medical situation. Hiding any disease can invalidate the plan or make it void, potentially leading to the refusal of payout when it is the time for the beneficiaries to receive the claim.

Lastly, remember that before you shop for a life insurance plan, learn the basic insurance jargon, and know exactly what questions you must ask your insurance expert. Do not rush into purchasing a life cover.

Listed below are some of the questions that you need to consider.

  • What is the guarantee in the insurance plan?
  • How to determine the amount of life cover required?
  • What all returns can you expect?
  • What would happen when the health condition alters?
  • What is the coverage in the case of disability?
  • What would happen if the policyholders are unable to make payment of their premium?

The Final Thoughts!

Without a doubt, life insurance is essential for people with dependents. It is simple to buy, and it could make a huge difference in the case that you pass away prematurely.

It’ll be difficult enough for the family to lose their loved one. However, the subsequent financial crisis left in the absence could change the future of the deceased person’s spouse and children if they are not prepared.

Life insurance is the right thing for your family and will assist you to leave behind a legacy of financial caring and responsibility.