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Why Life Insurance?

Why do you need insurance? 

When you buy insurance from MetLife, you are managing risk. You are transferring the cost of a potential loss to MetLife. The policyholder pays a regular amount, called a premium, in order to receive the coverage. Insurance premium rates are based on factors, such as age, gender, income, medical history, as well as the value of the insurance purchased.

  • Maintain your standard of living should you have a critical illness or become disabled.
  • Cover health care related costs like child care, as well as offering family coverage – allowing you to focus on health and recovery.
  • Provide for your family in the event of your death. There are life insurance options that protect your family’s home, lifestyle and education for children.

Ø  Links: More about Life Insurance  ||  How much Life Insurance do I need?

More about Life Insurance

In case something unfortunate happens to the insured, the life insurance will provide money directly to the beneficiaries. A life insurance doesn’t only provide protection, but also is a form of financial planning, as the beneficiaries could use the money for:

·         Making up for lost income

·         Funding a child’s education

·         Paying off household debt

Certain types of life insurance may provide benefits for you and your family while you are still living. Some policies will offer a payout upon maturity or when surrendering. Different types of life insurance are priced differing rates.

In general, life insurance is divided into three broad categories:

·         Term Life Insurance

·         Permanent Life Insurance

·         Endowment Life Insurance

Term Life Insurance offers coverage for a chosen period. This type of life insurance only offers the insured payout to the beneficiary upon the death of the insured within the chosen period. The policy will lapse if the policyholder stops paying insurance premiums. Term life insurance is comparatively more affordable, as it doesn’t offer any maturity payout.

A term life insurance is an ideal choice for those who need to protect their family from financial risks over a specific period of time, such as during loan repayment.

Permanent Life Insurance offers coverage for the whole life of the insured. The policyholder has to pay insurance premiums either for a specific time period or throughout their lifetime. Permanent Life Insurance will provide a payout to the beneficiary of the policyholder in case of insured’s death. Permanent Life Insurance also offers a surrender value if the policyholder chooses to lapse the policy before its maturity.

Some Permanent Life Insurance policies also offer a regular pension payout after contributing for a certain period. Such pension payouts can be received monthly, quarterly, semi-annually or annually.

Endowment Life Insurance policies are a mix of term life insurance and permanent life insurance. Endowment Life Insurance provides coverage over a specific period, while offering surrender and maturity benefits. You will receive a lump sum payout at the end of a chosen period. Some policyholders have used this kind of policy to save a specific sum for their children’s higher education.

 

 

Ø  Links: Why do you need insurance?  ||  How much Life Insurance do I need?

 

 

 

How much life insurance do I need?

Your goal should be to develop a life insurance plan that compensates your family for the loss of your income after your death. There are two ways to determine how much life insurance you may need.

1.    Calculate replacement income

2.    Survivor needs analysis

Calculate the replacement income need. This method helps to determine the financial contribution you will make to your family from now until you retire. This amount helps determining how much life insurance you will need. It calculates more than just replacing your income, as it also takes into account everything you provide to your family, including:

·         Salary

·         Benefits/ health insurance

·         Retirement savings

·         Personal services you perform for your family, such as childcare, cooking, home maintenance

·         Your personal consumption – annual spending on personal needs, such as food, clothing, entertainment

Survivor needs analysis. This method calculates the amount of income that is needed for your surviving spouse and children to maintain their desired level lifestyle. Your family’s needs are then compared to their assets, existing life insurance and other income sources to determine any additional life insurance requirements. An insurance agent or financial advisor can help you determine an accurate figure and choose appropriate coverage.

Why Life Insurance