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  • Why You Should Buy Term Insurance If You Are an Entrepreneur

    Why You Should Buy Term Insurance If You Are an Entrepreneur

    An entrepreneur is responsible for managing the finances of the enterprise’s administration and employees. An entrepreneur should, therefore, have efficient financial management skills. They should know where to put the right funds and where to withhold them. As an entrepreneur then, it is vital to utilize your funds the right way by opting for a term insurance. The purpose of any insurance plan is to safeguard you against a variety of risks. As an entrepreneur, one is fraught with risks on a regular basis.

    What is the meaning of term insurance? 

    Term insurance is a kind of insurance policy wherein the insurance company provides financial compensation to the chosen nominee/s if the policyholder passes away during the policy duration. One can ensure the validity of their policy by paying the premiums when required. Term insurance is a pure protection plan, meaning that it is concerned only with providing financial protection to your loved ones in your absence. It is not related to market-linked instruments.

    Why entrepreneurs should have term insurance 

    Increased liabilities 

    When you are a businessperson responsible for running the establishment, you may end up taking on more debts than the average person. These debts may be a part of a strategic business plan aimed to foster growth or expansion for your organisation. However, if anything were to happen to you, then there is a high chance that your family may be liable to handle these debts on their own. This may put a large dent in their already precarious finances. A term insurance plan with a high sum assured can eliminate such unpleasant situations and ensure that your loved ones have funds to pay off any debts.

    Unstable income

    Unlike the salaried employee, an entrepreneur may not have a regular income. Their income usually depends on how well their business is performing. This is more likely to occur if the company has been newly established. This could lead to their personal savings bearing the brunt. And if anything unfortunate were to happen to them, their loved ones would be left without adequate funds. Therefore, having a term insurance plan becomes paramount; it ensures a financial cushion for the family no matter the company’s performance at the time of the policyholder’s passing away.

    Long-term life cover at affordable premiums 

    Entrepreneurs are often very particular about where they are spending their money. A term insurance plan may also be quite suitable for an entrepreneur because their premiums are considerably low.

    What’s more, there are many term insurance plans that offer coverage up to 80 to 90-year-olds. As an entrepreneur, you may be working for a longer number of years than the average employee. So, you may also need coverage that extends for the long-term duration; and if you choose the return to premium feature, then you even get the total premiums returned to you if you survive the maturity of the policy. All this at a relatively lower premium!

    Points to keep in mind when purchasing term insurance as an entrepreneur 

    Now that you know the meaning of term insurance and why you need it, let’s take a look at the points one should keep in mind when buying it:

    Opt for a high sum assured 

    Get a thorough understanding of your liabilities, domestic expenses, family’s financial goals, and so on, before you choose the sum assured. The sum assured should ideally be high to fulfil all these funding needs.

    Use a term insurance calculator 

    A term calculator is an AI tool in which you can enter variables such as your age, gender, coverage requirements, sum assured, chosen term, and so on. You then receive an estimated premium. As an entrepreneur, you can utilize the term insurance calculator to plan out your finances. You will get a better awareness of how much you will have to spend to get the sum assured you want.

    Consider selecting the lumpsum premium payment mode 

    As someone who may or may not have a regular income, paying premiums on a regular basis can become difficult. Instead, you can opt to pay your premiums in a lump sum at once, ideally when the revenues of your establishment are good, and your personal finances are stable.

    Ensure to read the terms and conditions thoroughly before you sign any term insurance contract.

  • Why do I need Term Life Insurance and how much does it cost?

    Why do I need Term Life Insurance and how much does it cost?

    Term Insurance comes in handy when one has a family, debts or even mortgage plans. Unlike, Life Insurance, term Insurance has an expiry date set to it. It has to be renewed or canceled if the contract expires at any point. Insurance companies encourage individuals who have financial problems to get it since it is affordable to acquire it and so is it to maintain it. Despite its affordability, term insurance has a disadvantage, as it does not come with as it does not offer any tax benefits or cash value. What makes it different from other types of insurance is the term element as it lies between 10 -30 years. The terms also have a variance in the way premiums are paid. For example, premiums can; stay the same throughout the policy, decrease or increase. There are different types of term insurance hat one can choose from; level term insurance, annual renewable term life insurance, decreasing term life insurance and no medical term insurance.

    Worth of Term Insurance

    1. Affordability

    Term Insurance is a pocket-friendly type of insurance as the premiums paid are flexible depending on the type of life insurance. Also, the fact that term insurance makes it possible for one to acquire life insurance without necessarily going through medical checks, Medical checks, can be costly or rather other types of insurance cannot accept to give you the cover if, in the process, they establish that you have a chronic disease. This type of no medical checks is known as no medical checks term insurance policy. Its affordability allows one to pay up premiums at any time as long as at the end of the year the calculation of the premiums yearly adds up to the minimum amount that is supposed to be paid.

    1. Best on employees

    Yes, those you have employed in the company also need to feel some sort of security in their life while working for you. This is only possible if the employer opts to get the group term life, as the whole life insurance cannot work in this particular type of situation. It is common in the workplace and does not have portability benefits. This type of term insurance is worth it since; it is affordable, it covers everyone and the possession remains to the employer. Insurance companies offer group insurance that includes mass mutual, Cigna, bright house financial and principal.

    1. Death Benefits

    If the policyholder of the insurance dies, the immediate family becomes the immediate beneficiaries. Of which the money can be paid all of it then or during the course of their lives. Therefore, the immediate family can enjoy payment of children’s expenses, debt payment of hose rent payment just like any type of life insurance. Depending on the value of the insurance burial expenses or hospital, bills can be taken care of by the term insurance.

    1. Maturity benefits

    Although not all term insurance has a maturity benefit, Return on Premiums is a type of term insurance, which makes this possible. Whereby, the insurance gives out maturity benefits in terms of returning the premiums. If only the individual during the time of taking the cover to the time the cover ends does not come across any form of financial insecurity that has to be insured. In other words, a return on premiums life insurance allows one to save up for whatever shortly and thus protection of your money.

    1. Mortgage protection

    Payment of mortgage can be stressful especially if one is sick, dead or unemployed. That is now where term insurance comes into play. Through, Mortgage Payment Protection (MPPI) will only start paying off the mortgage 31 days or 60 days after the incident or accident, that makes it impossible for one to work anymore. The payments are only made on the borders on one’s income. If one’s mortgage is more than the income then one will have to take care of his /her on surplus, as the insurance cover is not responsible for that. Mortgage protection is only possible if one acquires term insurance and not whole life insurance.

    Insurance Cost

    Although term insurance is much cheaper as compared to whole life insurance, the cost has to be determined. The insurance cost has a variance depending on various reasons. Health, age, coverage amount, riders and time can be one of the variables that determine the cost of insurance.

    1. AGE

    The older one is the more expensive the premiums are ought to be paid. This also argues based on delaying to get the term insurance policy. For example, when one is young the premiums paid are ought to be the same throughout the year because the individual is still young, strong and in good health. However, when one delays and decides to acquire the cover when they are around 40 years or 50 years, payment will be around a 12% increase annually. So it is better to acquire term insurance earlier enough to prevent the extra costs.

    1. HEALTH

    Individuals who suffer from chronic diseases such as heart attack, high cholesterol, high blood pressure, nicotine use, drug abuse, HIV/AID and hepatitis. Before this, an insurance medical exam will be done; this is to provide any health information about you and your family’s medical history. Most Insurance companies also ask the doctors to report on one’s health status.

    1. TERM LENGTH

    The longer the period of coverage of term insurance the more expensive. The reason being one is pushed to pay premiums for many more months and this makes the insurance cost relatively expensive. Of course, consultation has to be done in various insurance companies to determine the cost of the insurance policy. The cover ranges from 10 to 30 years.

    Insurance Calculator

    This gives the rough amount of premiums that are to be paid monthly to obtain the insurance. As seen above there are different types of variables that determine the cost of insurance. The following steps represent how term insurance is calculated.

    STEP 1

    Give out personal information such as date of birth, income, marital status, number of children, gender and some habits or hobbies

    STEP 2

    Objectives according to the sum assured and the period one sets out. Also, establish how the beneficiaries will be able to acquire the money either one time or every month.

    STEP 3

    This is the final and the last step as the number of premiums set to be paid will be established. The individual will be able to choose from the different types of insurance suggested.

    Conclusion

    Term Insurance still stands out compared to whole life insurance. This is because of its affordability in terms of the insurance cost. Also because the term insurance calculator gives accurate or close to approximate the number of premiums as most of the variables are included during the calculation.

    Author’s Bio

    My name is Norman Frisky, I’m currently working as an editor at the Insurance Hotline. We offer Online Insurance, Term Insurance, and Online Term Insurance. Our mission is to build a secure future for our Members by providing best products and benefits.