There is nothing more important than your ability to sustain your life and livelihood. Therefore, it is wise to secure an insurance policy for the most valuable asset—your life. As responsibilities such as getting married, raising a family, or caring for elderly parents increase, so does the necessity for life insurance. Insurance provides financial protection for your loved ones, offering support when you and your family need it most.
What is insurance?
In general terms, insurance is a simple concept that can be explained in various ways. However, in straightforward language, insurance refers to a contract with an organization that provides financial compensation in the event of illness or untimely death. Some insurance policies also offer benefits while you are still alive. In this case, you can receive financial advantages in two ways: through specific events in your life or as income during your retirement.
Typically, the policyholder pays a fee to the insurance company in exchange for protection from certain risks, known as the premium. Depending on the policyholder’s needs, this fee can be paid at different intervals, such as annually, semi-annually, quarterly, or monthly. In some policies, you might receive life insurance benefits by paying the premium only once. The amount of the premium depends on various factors, such as age, gender, medical history, or the terms of the chosen policy.
How do insurance benefits work?
The financial loss that occurs due to the unexpected death of a sole breadwinner in a family can be significantly mitigated by an insurance plan. The remaining family members can use the insurance money to pay off home loans or other debts, or to secure their children’s future. Some insurance plans also assist in long-term capital preservation, providing regular income to meet your retirement needs. In other words, for those in Bangladesh who wish to secure their financial future, insurance can offer many valuable benefits.
How much insurance coverage do you need?
The type of insurance policy you choose largely depends on how much financial support your dependents might need. However, the most logical question is: How much insurance coverage should you have? There are various methods to determine this amount, but a common guideline is to have insurance coverage that is at least 10 times your current annual income. Understanding the complexities of different policies and selecting the best one based on your needs can be quite challenging. Below is a detailed overview of the types of insurance plans you can generally purchase.
Types of insurance plans commonly available:
• Savings and Investment: Some specific life insurance policies offer both protection and investment benefits. A portion of your premium is used for insurance coverage, while the remaining part is invested in equities, bonds, or a combination of both. This arrangement provides financial protection in case of accidental death or sudden illness. By investing funds in alignment with your investment goals and risk tolerance, you can maximize your returns. Many renown insurance company offers various plans of this nature based on your needs.
• Health Insurance: These plans protect you and your family from financial distress during medical emergencies. With health insurance coverage, you can ensure top-quality medical care without depleting your savings. The insurance company will either assist you in receiving cashless treatment or cover the hospital expenses for your illness.
• Education: Education costs are continually rising. However, by planning your child’s education expenses in advance, you can secure their future. An education insurance policy provides a lump sum amount to cover higher education expenses. After the policy term ends, the funds can be used for purposes other than education if desired. Another key benefit of this policy is that if you pass away during the policy term, your child will receive a monthly benefit from the policy, and all future premiums will be waived.
• Retirement Plans: These insurance plans allow you to save over a long period, providing financial stability during your golden years. In a retirement plan, the policyholder is required to make regular contributions of a fixed amount for a specified period before retirement. Subsequently, the accumulated funds are returned to the policyholder in the form of a pension or annuity at regular intervals.
• Group Insurance: In bancassurance plans, this type of insurance policy provides standardized coverage and competitive premium rates to employers offering insurance to employees or customers. Employers typically have two options for offering insurance to their staff: either including it for free in the employee benefits package or providing a group life insurance package that employees can purchase individually. The benefits of these insurance plans include protection for employees and their families against death and accidental disability, as well as providing health and life insurance coverage.
Life is so unpredictable that it is almost impossible to foresee what may happen in the future. Insurance is a method that helps you plan for an uncertain future with confidence. The earlier you purchase a policy, the lower the premium you will have to pay. Even a small policy can provide protection for your loved ones during difficult times. It can also help in repaying debts, covering ongoing living expenses, and saving for your child’s higher education. With the right insurance coverage, you won’t need to worry about financial uncertainties during challenging times, allowing you to focus on the important aspects of life.
