How does Life Insurance work? Things to consider before getting home insurance

How does Life Insurance work? Things to consider before getting home insurance

Uncertainties are a part of life. Things get complicated, especially when there are many dependents in the family, and something awful happens to the family’s sole bread-earner. To avoid such an inconvenience, it is advisable to have life insurance. Given the present scenario, life insurance has become an essential part of financial planning in any household. It is an agreement between an insurance company and you wherein the company provides a death benefit, including a lump sum amount of money, in exchange for the timely payments made by you to the company.

How does Life Insurance work?

Life insurance can be of two types- Permanent Life Insurance and Term Life Insurance. As the name suggests, the term life insurance covers you and provides you with protection for a fixed period of time. In contrast, permanent life insurance offers you the insurance of a lifetime. A term life insurance covers 10 to 30 years, and the beneficiaries can claim the insurance amount within this period if the insurer passes away. The return value of this is relatively high as compared to the money invested. The only limitation of the insurance is you don’t receive the amount if you die once your term life insurance get expires. Under Permanent life insurance, you have to pay the instalments throughout your life and build a cash value.

Things to consider before getting home insurance:

Like life, accidents are prevalent in every house, which can be harmful to both the individuals and the home itself. Just like life insurance, home insurance is also a significant investment. Also known as ‘hazard insurance,’ provides full coverage for any damage to the building such as fire, theft, or any casualties caused by hail, lightning. Some policies also cover damage done to the clothing, furniture, or any other household possession.

There are several things to consider before getting home insurance, which are:

  • Contents of the home- Home insurance covers the possessions and contents of the house. Before buying home insurance, it is essential to keep an account of the contents, including the furniture. In case there is some theft, the exact amount of the stolen possessions.
  • Comparison between the insurance companies- Different insurance companies offer different policies with a variation in the terms and conditions. Seeking some help from a broker who has contacts and information about multiple insurance companies or hiring an agent of a single company for that purpose is a wise decision in this matter.
  • Knowing about the exclusions- Things covered under home insurance are the first thing people want to know. Still, besides this, it is equally important to have a clear idea about the components excluded from the insurance policy. Having a clear understanding of this helps in avoiding any confusion in the future.

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