The insurance market is very versatile these days and there are many insurance policies which can confuse a person which policy is best to choose. There are some elements which you need to know before purchasing an insurance policy for you.
Before purchasing an insurance policy, you should have some ideas in mind about the purpose of buying these insurance policies.
Life Insurance & Death Benefit
It is a contract between insurance company and a person in which if some mishap happens, company is liable to give benefit which is decided earlier will be given to named persons or people who are close to kin. There are many type of insurance and it can be for car, house, factory or even for your business. Today we are talking about death benefit. This type of insurance applies on a person’s life. If unfortunately, person dies then insurance company is liable to give the money to the next of kin of that person who he has mentioned to the insurance company.
Premium & Type of insurance in Pakistan
When you buy an insurance policy you have to give money like rent to the insurance policy. This money is used by insurance policy to invest which they will give back once person dies. You might be wondering how this premium determines for a person or is it same for everyone. It depends on your insurance policy and how much you are willing to pay. These are calculated through mathematical formulas and you have to pay premium monthly or annually. One thing to remember is company will only pay the face value or death benefit to the family.
There are two types of insurance plan which are famous in Pakistan:
- Term life insurance
- Whole life insurance
Term life insurance
Term life insurance is an insurance in which person has mentioned the time period in which he will die. The specified term period is usually 10 years but in some cases 15 years. If person stays alive after specified time period, then company is not liable to give money to the insurance holder. But some companies do give option of extending this term life insurance by getting extra premium.
Whole life insurance
The whole life insurance is a plan in which policy holder has to give premium for rest of the life and when he will die the insurance company will pay the face value. But premium is high for whole life insurance when compared to the term life insurance.
Decision Is On You
When considering the insurance policy, very first thing you should consider is why or on what terms you want to buy the premium policy. And also which type of insurance policy suits you?
Which Insurance Policy & Company Is Right For You
So while making decision you should consider three things. How much premium you can afford to pay and for how many years? Second thing you should remember is can a term life policy converted to whole life policy and what will be the extra premium for that. Finally, the premiums are fixed or not.
Once you have completed your research about the insurance policy then next step is the selecting the insurance company. Main companies in Pakistan are Jubilee, efu, Adamjee and statelife. These are trust worthy names in Pakistan insurance policy and if you are making deal with unknown company make sure you have completed your research on them.
I hope this article would be helpful to you if you have any questions you can ask us in the comment.