Do I qualify for a life insurance? |
Posted: March 8, 2017 |
If you are the fore-running bread-winner of your family or contribute in some way to the financial upkeep of your family, you need to protect them from inheriting your debts or falling into bad times when you are not around. You might be wondering whether you are too early or late to apply for a policy that guarantees your family peace of mind. Well, any time is a good time once you realize its importance; however, it must be said its best to start an insurance policy when you are young.
Whether you qualify for an insurance plan is subject to a few factors. Your age, for one! The early bird catches the first worm – and in this case the ‘worm’ is the lowest premium and a long-term policy which gives the maximum benefit or protection to your family or beneficiaries. The older you grow, the higher the premium amounts. Your gender, too, plays a key role. Since women live longer lives than men, they are given an advantage in terms of the marginally lower premiums to pay. Your lifestyle habits contribute to the terms of a life insurance policy. If you fall in the smoking, or addictive habit category, which is proven through medical tests, you will have to face the music of a higher premium, because the risk associated with you is greater. Finally, the duration or tenure of insurance coverage determines how much of a premium you qualify for. While shorter-term insurance policies may have a higher premium, long-term coverages require you to pay out more. So, basically, your age, gender, lifestyle habits, and coverage term determine whether you qualify for an insurance and how much of a premium you are going to pay. Does that mean that people who have recovered from a critical illness are not ever going to qualify for a policy that can save their family the trauma of uncertainty in case they are faced with an irreversible situation? Such is not the case, though some life insurance companies may refuse you, there are others who are willing to extend the same to you at a higher premium. Very soon though there might be another factor influencing how much premium you are going to have to pay. The Insurance Regulatory and Development Authority (IRDA) will be joining hands with credit bureaus like CIBIL to conduct a credit check of the potential policy holder, and take into account past premium paying history before it charts out a premium for him/her. To prepare for such a time, instead of looking for ways to generate a free CIBIL report online, get a CIBIL account, download the report and understand the basics of a good credit score and how to increase CIBIL points, to get a good premium value for your policy.
When we talk of what it takes to be eligible for an insurance policy, we cannot leave out the discussion on the types of life insurance available in the market. While each company has many products, each offering its own set of benefits, life insurance products can be broadly classified into 2 types – term life insurance and whole life insurance. You may want to look up benefits of each type before you decide to channel your hard earned money into insurance policies. Term insurance products only offer death benefit.
There’s no cash benefit after the policy term expires. Policy terms can range from 10 – 35 years. This means if nothing terminal happens to the policy holder for the insurance term the investment towards the policy lapses into nothing at the end of the insurance term. It is a policy a good product for those you are starting families. Whole life insurances work slightly differently. There is an inbuilt savings feature that uses a percentage of your premium towards savings, while the rest is driven towards providing coverage. In a whole life insurance, you can withdraw, reinvest or borrow this part of your money in your lifetime. The premiums for a whole life insurance are typically higher than term insurance premiums, but that is mainly because of the savings nature of this type of policy. Towards the beginning of the term, the percentage going into the savings component is higher. With time, the percentage that goes towards your coverage tends to go higher, while the savings component shrinks.
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