The most frequent question asked about insurance is what is the right time to buy insurance. So, we are here to answer your question. Just to explain to you when is the right time to buy Insurance we have come with this blog with detailed discussion. We have answered all your questions like the importance of life insurance, the benefits of life insurance, the right time to buy life insurance, how to buy life insurance? and many more one by one and in a systematic manner. So, keep on reading the blog to get answers to your questions.
Importance of life insurance?
While buying life insurance one of the most important aspects is understanding the purpose of life insurance; Life insurance has been created for two particular reasons number one is to protect your income in the event of your untimely demise and the second reason why this insurance created was to protect all the people that are left behind when you are not there anymore.
When is the right time to buy Insurance?
The right time to buy insurance is when you are young and healthy.
Why do I need life insurance?
There are two main reasons for having life insurance the first is that life insurance protects your future potential income and the second reason is, it protects your family from all the liabilities that might be there that you need to take care of.
Which life insurance should I buy?
Now after knowing why life insurance is important you must be in the confusion that should I buy term insurance? Should I buy whole life insurance? Should I buy an investment ring product? Or should I buy a traditional low-life product? and so on. There are many different types of life insurance but you can categorize them into two primary types: Permanent & Temporary.
Now your temporary life insurance products are very good for guaranteed period liabilities. For example, You know that you have a mortgage which is going to go for 10 years, 20 years, or say 25 years. So you know for sure that this mortgage will stay with you for at least this period of 20 years. Buying a term product at this point makes a lot of sense because that product covers the purpose of protecting your income for that period of time which is the mortgage period.
However when you are buying life insurance as a commitment towards your family towards your children or parents. We normally don't know how long that responsibility will be with you and that is when a whole life product becomes a lot more important to understand.
There are insurance products that are used specifically for corporate liabilities. Now there are a lot of corporate liabilities. We generally can’t predict the duration of how long these liabilities will stay with us. So a lot of people buy Keyman insurance which is nothing but life insurance that pays out in the event that a key person in the company falls ill.
Now, this product Keyman insurance for liability protection or corporate liability protection might make sense for you to buy an investment ring product because it allows you to have that policy for a longer period of time. Because you can’t predict how long the term is fixed for; unless you have a corporate liability that has a fixed duration.
So let's say the corporate liability is specifically for five years. You can buy a five-year term product to be able to manage them. But if you don't know how long that liability is going to stay on your books it might make sense for you to look at an investment link product or a whole life product
How do I buy life insurance?
Well, there are a few ways for you to be able to buy life insurance. There are some insurance products which you can buy yourself you don't need to spend time with an advisor, but when it comes to matter of life and death it's always better to spend time with an advisor who works as a doctor. The simplest way to buy it is to sit down with the financial advisor and get things cleared out. They will tell you which insurance to buy? How much to buy? When to buy?
How much insurance should I buy?
Let us give you the rule of thumb: It's ten times your annual income that you should buy life insurance. Now that is the rule of thumb. It's just like how much water should you drink every day? The simple answer is you should be drinking 8 to 10 glasses of water a day. It's a general rule of thumb that allows you to have a benchmark on what you should be doing or should not be doing. You would have probably even heard that you should be walking 10,000 steps a day. It's a general rule of thumb. Some of you might need to do 20,000 and some might need to do 7,000. So this number will keep changing. For how much life insurance to buy, the general rule of thumb is 10 times of your annual income.
We want you to do a little introspection on how much life insurance you have and if you have 10 times of annual income, that's great but if you don't, then spend time with a financial advisor or with an insurance advisor. They can guide you on how much you need to buy. The rupee figure will keep changing. So let's say your income today is 10,000 rupees every month in a year so in a year it will be 120,000 rupees. So if we go 10 times that you need about 1.2 million rupees worth of life insurance. Now if your income increases from 10,000 to 20,000, your life insurance requirement also Increases.
What is the purpose of buying life insurance?
When your insurance advisor recommends you to buy a certain insurance product, do have a very frank conversation that why do I need it? how much do I need? when should I take it ? and what is the right one that I should take? When you haven’t answered these questions for yourself as a client, then it will be very difficult for them to help you make a financial decision.
In this way, we have discussed all the aspects of the right time to buy life insurance. It is always advisable to buy insurance as soon as possible. Spend time in consulting, spend time in taking advice. Hope you may have got the right guidance through our blog. For more such guidance keep reading our other blogs always and keep visiting the website.
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