Having a life insurance plan is a financial security for medical problems that an individual may incur throughout the course of their life. The life insurance plan secures a person and makes sure that there are no shortages financially when the individual faces a medical emergency. There are also several other benefits for the life insurance plan that can help save the finances and the life of a person.
Unlike before, nowadays life insurance plan has become a necessity more than a choice for most of the individuals and a better economy has now enabled a number of people to buy insurance plans for themselves and their families. Nowadays, in order to cater the requirements of the insurance seekers the insurance provider offers complimentary medical and health insurance to employees and their immediate family.
Reasons for Buying a Life Insurance Plan
Having a life insurance plan or a medical insurance of any sort is important for each and every individual. Having a life insurance plan can prevent the worst from happening and can help any individual to prepare for the worst. Let’s take a look at some of the reasons why being insured under a health insurance plan is beneficial include:
- Health insurance plans are cheap in nature. There are different insurance plan premiums that are there to suit the incomes of every individual. This is done so that everyone can afford a health insurance plan for themselves and their families as well. Term insurance plans have a premium that can be decided by the policyholder which they are required to pay on a monthly basis.
- Life insurance plans can last throughout the lifetime of an individual. This can only be done if there is an agreement with the company and the individual to prolong the life insurance plans even after the policy term has expired. With such lie insurance plans, a customer does not have to worry about buying and investing in a separate life insurance plan each time the policy term expires.
- There are certain life insurance plans where individuals can also invest certain amounts of cash along with being insured over a certain period of time. The life insurance plans act as a protective plan and a bank to secure and retain the funds of the policyholder for a certain number of years.
- Apart from the death benefit of a life insurance plan, there are several other benefits to the plan itself. Those who live out their life insurance plan get special benefits on their premium. Life insurance policies may also give the entire term premium to the insurance holder on completion of the insurance term plan.
- Life insurance plans can also be converted into other plans. Depending of the type of life insurance plan, the plan can be modified into a different insurance plan or it can even be transferred from one company to another. This is done so as to avail of more benefits on the life insurance plan itself.
- Taking care and maintaining the health of the insurance holder is solely the responsibility of the insurance holder. All other medical expenses that may be needed for the policyholder throughout the course of their lives are all taken care of by the insurance policy on behalf of the policyholder.
Calculating Life Insurance Premiums
The premium for a life insurance plan depends on the type of life insurance plan that is being bought and the company. There are some companies where the premium for insurance plans is pre-decided. While in other countries, the premium can be mutually dependent between the customer and the company. There are also certain insurance companies that calculate the insurance premium for individuals using life insurance premium calculator for them. Some of the factors that determine the insurance premium for a policy include:
- Age – The age of the policyholder is the prime factor for the calculation of an insurance plans premium. The younger the insurance policyholder, the better the premium will be for the policyholder. This is because younger people are healthier and are less susceptible to medical problems. While those who are older have a higher premium rate.
- Gender – Statistically proven, women go to doctors more often than men do. More men are also seen to be diagnosed by critical diseases as compared to females. This is the reason why men pay a higher rate for premium as compared to females.
- Body Mass Index – Health insurance companies take into consideration the body mass index of individuals who are going to be insured under their policies. Those individuals that have a higher body mass index are more likely to incur a disease as compared to those who have a relatively good body mass index. In such a case, the premium is higher for obese people.
- Family Medical History – The medical history of the family of the insured needs to be known by the health insurance company. The family health insurance can help determine if the insured may get any health related problems in the future. The medical history of the individual as well can help determine the future health problems of an individual. The more severe the medical health insurance history of a family, the more will be the premium for the health insurance plan.
- Occupation – There are a number of occupations that are categorized serially according to their risk to the individual itself. There are certain occupations that are considered more hazardous in comparison to others. Those who are working at oil firms or mining underground, are considered to be more at risk of getting a health-related problem as compared to a businessman or a company employer.
- Income – The income of an individual will determine if they will be able to pay the premium for their health insurance plan or not. Those who have a higher income have a greater premium rate as compared to those individuals who do not have such a high income.
- Smoking and Alcohol – If the insured is a smoker or consumes alcohol on a regular basis, their insurance premium will be higher as compared to non-smokers and non-alcoholics.
- Hobbies of a person – those individuals that like to take part in high risk hobbies or like adventure activities are likely to have a high insurance premium as compared to those who do not have such high-risk hobbies.
- Travelling – those individuals who travel more often to foreign countries that have a high health risk are required to pay a higher amount in terms of premium.
- Debts – Those individuals who have a great number of debts in the form of compensating for loans, credit card bills or any outstanding bills for that matter will have issues when they want to get a health insurance plan.
Different Types of Life Insurance Plans
In general, there are different types of life insurance plans that are offered to the masses. Each plan has its own set of inclusions and special features that separate it from the general life insurance plans. Some of the different types of life insurance plans that are offered by insurance companies are as follows:
- Term Life Insurance – This is the simplest form of life insurance plan This plan provides death benefit to the insured. In case of the death of the insured, the term life insurance plan will compensate in terms of money to the nominee of the insured or the family of the insured so that there are no financial problems that may arise in the future.
- United Linked Plan’s (ULIPs) – A comprehensive plan that both acts as an insurance plan and an investment plan is the united linked plans. This plan covers for the health of an individual and it also acts as a fund that is meant to save a certain amount on behalf of the insured to be useful in the future.
- Endowment Plans – These life insurance plans are also acting as investment plans that save the money that is paid in the form of premium. This amount that is saved is given back to the policyholder at the end of the policy term or in the form of regular maturity bonuses. Endowment plans are sure savings plans that are meant to benefit the insured on a regular basis.
- Money Back Life Insurance – A money back life insurance plan gives back a certain amount of money that the insured had already paid in the form of premium to the insured. These plans help those who are insured to meet their short-term financial goals.
- Whole Life Insurance Plans – These insurance plans are supposed to last throughout the life of an individual. There are also certain life insurance plans that last till the individual turns a 100 years old. The sum assured from the life insurance plan and the premium for the same are decided at the time of purchase of the insurance plan.
- Child Plan – These are life insurance plans that are specifically made for children. These life insurance plans may be temporary (which last a child for a couple of years) or permanent depending on the type of insurance plan that is bought. The child insurance plan is a huge financial commitment that is meant to build up money for the future of the child. When the child turns 18 years of age, the sum assured is given back which will help to finance the child for the future.
- Retirement Plan – Retirement plans help to build up money for the insured that can be used as a financial backup for the future. Retirement life insurance plans make sure that the individual is financially secure and can lead a free and independent life after they are retired. These life insurance plans also come with additional death benefits. In case of the demise of the main policyholder, the entire sum assured from the insurance plan is paid to the nominee that was elected by the insured person.
Wrapping it up!
With the uncertainties of life, it is very important for every individual to have a life insurance policy. However, one should consider all the above mentioned aspects before zeroing in on a plan and choose the plan that best suits their requirements.