Average Life Insurance Policy
Ever since life insurance has been made compulsory, the sector has seen significant growth. However, not everyone knows what a life insurance policy is, what its benefits are, and most importantly, what an average life insurance policy should consist of to guarantee proper protection to the insured. Going through a few facts and statistics in this matter will help people decide what kind of policy to choose.
It is estimated that, in America, an average life insurance policy provides $100,000 in benefits. However, although this may seem to be an ample amount of money, it is actually not enough to provide for the cost of long-term care for the policyholders family. Therefore, one needs to look at a better option. It is for this reason that one is advised to be aware of the financial implications of the life insurance policy that one plans to take.
Finance analysts point out that a life insurance policy should cover a person for at least six to ten times his annual income. Six times the insurance is sufficient if one does not have a lot of other outstanding debt that needs to be paid back. However, if you have taken on debt in the form of term loans and mortgages, you should consider taking a policy that covers at least ten times your annual income. This will ensure that, in case of an eventuality, the surviving members of the family will not have a very hard time managing on their own. If this is not followed, the lifestyle of the surviving members cannot be properly maintained after the death of the policyholder.
Surprisingly, not many people who have insurance fall under these criteria. Hence, it is important to make people aware of this factor. This will guide people towards making appropriate decisions when buying an insurance policy.