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How To Protect Your Debts With Life Insurance?

Last modified: 20 May 2013

Why Do I Need to Purchase a Life Insurance Policy?

Although everyone aims not to be in debt when they grow older, most of us are forced to take loans or mortgages in order to buy better things for our family such as a car or a house. Since debts and mortgage repayments become a part of our life; it is important for us to ensure that these financial commitments do not burden our family after we pass away.

One of the best ways to ensure that debts do not become a problem for our dependants is to economize and pay debts in full while we are still alive; however since life is filled with uncertainties we cannot predict if we will pass away at the age of 30 or 80.

Due to this very reason, it is a must for everybody who has dependants to take out a life insurance policy in order to ensure that their family does not have to worry about previous debts after the main bread winner of the family passes away.

 

How Does Life Covers Work?

Life covers also known as death insurance and term life covers are valid for a selected number of years, such as 5 years, 10 years, 20 years or until the policy holder turns 99 years old. Term life protection plans provide for the family of the policy holder when he passes away due to certain insured events such as illness, accidents or natural causes. The family of the policy holder can then claim for life cover compensation within a fixed number of days.

The family has to provide documentation to prove that the policy holder passed away due to a certain reason. Once the insurer approved the compensation claim, the policy holder’s family or the beneficiaries will be given one lump sum payment to help them run their household or repay debts, loans and mortgages.

 

How Much Insurance Is Enough For My Family?

Due to the constant increase in cost of living and high inflation raise, there is nothing known as too much life insurance. However; the right amount for you will depend primarily on your financial commitments along with your budget. There are a few ways you can keep the premiums of life insurance affordable and one of these ways is to keep healthy, not start smoking, maintain a low risk life and pay premiums once a year in advance.

Shopping for policies online after comparing 3 or more plans is yet another way you can save a few dollars yearly on life insurance plans. Keep in mind, that the insurance plans offered online are meant for buyers with all budgets, however low end plans tend to have restrictions hence; make sure to read the policy document along with the fine print before deciding that the cheapest policy is the best.

While buyers with pre-existing health conditions or older buyers are not encouraged to choose an exceptionally long waiting period; doing so can reduce the premiums you have to pay to the insurer.



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