If you're like most people who have already bought a Life Insurance, then it's because you're worried about something happening in the future to affect your family financially. It's not just about protecting your loved ones in case of your death; it's also about protecting your family from financial hardships if something unexpected happens to you.
Life insurance is a contract between an insurance company and you. It pays a lump sum to you, or your beneficiaries, in exchange for the return of premiums paid by you during the period covered by your policy. The life insurance policies available vary greatly in their coverage options, benefits and costs.
The most common types of life insurance include:
Whole life Insurance - A type of life insurance where the coverage remains in force until the policyholder dies.
Term life insurance - Provides coverage for a specific period, such as 10 years or 30 years, after which the policyholder may withdraw from the policy.
Why should you consider getting life insurance?
If you're thinking about purchasing a policy, there are several reasons why it might be worth doing so - You would like to ensure that your family will be taken care of financially after your death or You want to protect your loved ones from financial loss if something happens to you (such as injury or illness).
What about life insurance premiums?
Simply put, premiums are payments you make to keep your life insurance policy. Premiums are based on the coverage you need and how much you want to pay. The more coverage you have, the higher your premium will be. The amount of money you pay as your premium is called "price," and it's based on how much of a risk you are (and are not) for the insurance company.
For example, if you're a 40-year-old man who has never smoked or used drugs and has no health issues, your price will likely be lower than if you were an 80-year-old man with heart problems or diabetes.
The reason for this is simple: there are risks associated with being older—and those risks have been factored into the premiums.
What if you stop paying your life insurance premiums?
If you stop paying your premiums, it could lead to a lapse in coverage, an increase in rates, or even an outright cancellation. Also:
1. Your insurer may consider that default risk and charge more for coverage.
2. You will be responsible for paying any claims arising during this nonpayment period.
Furthermore, it can be hard to know exactly what will happen if your policy lapses, so here are some things that could happen:
1. You might not be able to renew your life insurance at all.
2. Your premium may go up.
3. Your policy could lapse for a long time without being reinstated.
Here are ways how your insurer can help you in such cases –
By reinstating the policy
You can request your insurer for the reinstatement of the policy. They will then take action on this request after due consideration, and they will inform you what steps they have taken regarding the reinstatement of your policy.
By altering payment mode
If you have stopped paying your premium for a long time, it is advisable to check with your insurer for a change in the payment mode.
By providing easy loans
Your insurer may offer easy loans to you when you are struggling to pay their premiums and need some extra time. You can apply for this loan facility online or over the phone and have it approved within a few days or weeks.
By facilitating payment in instalments
Your insurer may also facilitate you with an installment-based payment option. This may be more convenient for you if you are not able to afford full payments at once but still want to secure your life insurance policy.
How can you avoid all this from happening?
If you want to avoid all this happening in the first place, then:
1. Make sure that all your payments are made on time
2. Check in with your insurance agent regularly so they can keep track of what's going on with your policy
3. Never stop paying for insurance without talking to an advisor first!
It is better to continue to pay premiums on your insurance policy than to bail out of the plan and put your family at risk. If you have already paid for a policy, it is financially favourable for you not only to continue but to make premium payments so that you can feel secure about your family's future financial security.
Rakesh Goyal is the Director of Probus Insurance, an InsurTech broking company selling both life and non-life insurance policies.