This blog post is going to give an overview of Life Insurance in Pakistan.

What is Life Insurance?

Life Insurance is a contract between an individual (the buyer of the insurance policy) and the insurer (insurance company).In this agreement, the insurer is liable to pay the death benefit to the beneficiaries upon the death of the insured.

The purchasing of a life insurance policy is determined by the applicant himself. the selection of the policy is driven by the lifestyle of the insured’s dependents and how much the amount will be required to maintain the needs of his family.

Life insurance is classified into three types:

Whole Life Assurance

When the sum assured is to be paid on the happening of the certain event, i.e. death of the insured, and then it is called whole life assurance.

Term Life Assurance

On the maturity of the life insurance policy, the amount is paid in one shot to the policyholder.

Annuity:

When on the maturity of the policy the sum assured is paid in installment, usually monthly, it is called an annuity.

The best age to get life insurance

The ideal age for obtaining life insurance is technically right after birth. Life insurance is age-banded, which means that as each year passes, the policy becomes more expensive.

The best age to purchase life insurance is under 35, but few people in that age group are able to afford life insurance.

What is the cut off age to Get Term Life insurance?

While you have to be 18 years or older to take out a life insurance policy, you can take out this type of insurance for or on behalf of a child or minor. It is recommended to take out a life insurance policy no younger than 25 years but no later than 50 years. The sooner you take out life insurance, the greater the benefit will be.

However, if you are over the age of 60 years, you may not be able to get term life insurance as most providers have this age as a cut-off to provide benefit. This is largely due to the fact that the insurer runs a greater risk of having to pay out a full benefit in case of death before they are able to cover the cost of the payout from monthly payments or premiums.

What are the various modes of payment for premium?

Premiums can be paid by the policyholders to the insurer in multiple ways depending on the insurer you are getting a policy from eg: in yearly, half-yearly, quarterly or monthly instalments.

Key Difference between Health & Life Insurance

The following points explain the difference between health insurance and Life insurance:

Life insurance, as the name suggests, is an insurance plan that covers the risk of contingencies that can affect human life and pays out the sum assured to the nominee on the death of the insured, or to the insured on the expiry of the definite term. Conversely, an insurance product, taken out by an individual, to compensate for the cost of medical and surgical expenses, but only up to the amount covered, is called health insurance.

In life insurance, both survival and death benefits are provided to the policyholder. On the contrary, health insurance provides treatment and medical benefits, in case of illness or accident.

The premium for life insurance can either be paid in a lump sum or periodic intervals, usually quarterly. In contrast, the health insurance premium is paid in a lump sum for the whole term.

An assured amount is paid to the nominee on the demise of the insured or the insured on the maturity of the policy, in life insurance. However, in case of health insurance, no money is recovered, if the term of the policy is expired instead it is reimbursed in case of any health issue. Life insurance is usually taken for a long-term say 10 or 20 years. As against, health insurance is taken for one year.

Key Differences between Whole Life and Term Life Insurance

In Term Life insurance, the policyholder gets insured up to a particular period only. On the other hand, whole life insurance works throughout the life of the policyholder.

In Whole Life Insurance, there is no definite period specified, i.e. it is not known how long the contract will continue. Conversely, in Term Life Insurance the definite time is specified in the contract.

Types of Life Insurance Plan

1. Endowment Plan

This kind of insurance policy is considered to be as the solid one in terms of return. This is one of the reliable methods of saving in which the sum is guaranteed to the insured either at the specified time or at his death.

The benefit of this plan can also be increased by the completion of specific requirements. You can read about all the details here. This cover is known as supplementary cover.

2. Children Education Plan

This plan is going to help your child’s future. In order to make it grow and protect, this insurance policy is well suited for all the parents. It also offers Cash value. On the death of the insured, Assured sum or cash value whichever ever is higher is given to the beneficiaries.

Some of these policy’s receivable can also be used for marriage as well. furthermore, some companies provide education continuation plan too under this policy.

3. Marriage Plans

Its a dream of every parent to see their daughter getting married the way she has always dream off. This policy is going to help you to make your daughter’s dreams come true. You can receive the benefit while you save money under this policy. At the end of the decided term, the holder of the policy will get the sum.

Some companies provide add-ons under this policy.

4.Retirement Plan

Working whole life is not the option and Retirement is something that has to come to everyone. So why not plan your retirement smartly by getting a plan for it.

This plan is going to help you in certain cases i.e. accidental death, sudden death, injury permanent disability. This plan also provides the option of receiving the accumulated cash value and get yourself enrolled for pension plan of life.

How does it work for you?

There are three, major elements of Life Insurance:

1) Death Benefit

The benefit is the amount guaranteed by the insurance company to the beneficiaries identified by the insured upon his death (or completion of policy tenure). The insured will choose the desired death benefit amount based on the estimated cost to cover future needs of dependents.

2) Premium Payment

The cost of insurance (COI) is determined by the insurance company. The premium amount is exclusive of other fee charges. Premium is influenced by the number of factors i.e. age, medical history, occupational hazards and risk propensity. The insurer is obliged to pay premium till the time he expires.

3) Cash Value

Cash value acts as two pointers:

1. A saving account can be attained by the policyholder with cash accumulated on a tax-deferred basis during his life. Some policies have restrictions depending upon the money withdrawn.
2. The second purpose of cash value is to offset the rising coast or to provide insurance as the insured ages.

Why Life Insurance is necessary?

There is nothing like imaging yourself on a death bed and helpless. The worst scenario you can imagine after this is “Your dependents being left with nothing to survive for the rest of their lives” To make sure this doesn’t happen, Life insurance is important for every individual.

This decision of purchasing an insurance policy is going to come handy once you’ll be old or in-case of retirement, it is going to pay-off the huge numbers that you’ll be unable to pay from current cash-flow. Life-saving and the death benefit is one aspect of insurance policy however you’re also going to get money once the tenure of the policy is at its completion.

1. Life Insurance for Children

In the case of Hereditary Risk, Parents can buy a Life insurance policy for their child. In the thought of expecting a long life for their child, parents will go to every limit to make their future secure. The best way is to buy an insurance policy under their name so they can use it when they will need it for their families.

2. Life Insurance for Parents

Life insurance can also be important in terms of investment. You can do this by getting a life insurance policy for your parents. Suppose that the premium of this life insurance policy is going out from your pocket and by making yourself the beneficiary of this policy, you’re going to save is the amount for the longer period of time. This option is considerable when your parents are young in age.

3.Life Insurance for Business Persons

Life insurance policy is also important for business persons. You’re running a business of your own or in partnership and most of the people relies on you. It’s necessary for you to buy a personal Life Insurance policy for the purpose of your business obligation.

4.Starting off with a “Family”

Life Insurance policy can be purchased when you’ve decided to start off a family. In this time, the rates would be comparatively cheaper than the time you get older. Better consider buying it now!!!

5. Marriage

One of the best offers the Life insurance policy comes up with is Marriage plan. In Pakistan, one of the most important things to worry about is ” how we are going to bear the expenses for our child’s marriage” this scenario is mostly applicable to girls. Buying a marriage plan under life insurance is the best thing you can gift to your child and peace of mind for yourself as well.

6. Child’s Education

Education plan under the life insurance policy is also one of the reasons why you should start making up your mind towards this financial product. This plan is going to take care of the finances of your child’s education on which the whole development of your child’s career and life is dependent upon. In Pakistan people usually don’t plan upon the finances that are going to come in their ways as the child grows up. Today he is in school and in the next 10 years, he is in high school and just like that he is standing in front of you and wants to go for a certification which is not pocket-friendly. This plan is going to help you then.

When does a policy lapse? How it can be revived?

It can be paid within a certain period specified by the insurer, from the date of first unpaid premium. It can be revived by paying the premium within the set time period.

Companies that provide Life Insurance in Pakistan.

These are the basic points towards the importance of insurance in an individual’s life. The most important thing you should keep in mind while buying an insurance policy is to get it compared. With so much competition online, it is pretty hard to get your eyes on the right options. Smart Choice is here to make your life easier. Simply log on to www.smartchoic.pk and get your plans compared. For further assistance please feel free to talk to our representative available at your service.

Khurram Zahid

The post Life Insurance in Pakistan: A Fundamental Guide appeared first on Smartchoice.pk.

In recent days, tensions between Pakistan and India have escalated to such heights that there has been unprovoked firing across the Line of Control due to which many nearby civilian areas have also been affected and there have been causalities as well.  With the risk of war looming around, it’s always a good idea to have insurance cover. In this article we will pinpoint some of the key types of insurance one must avail for sure while living in such sensitive areas of the country.

Life & Health Insurance:
It’s widely said that “Health is Wealth” and this is surely said for all the right reasons. A person can only perform and manage his daily workflow only if he is well and fit enough to do so.  Staying health is one of the most aspects of one’s life.  The organization where you work might have already offered you health insurance as a benefit but the covers associated with health insurance are only for the cost of treatments of any ailments or injuries etc. hence you should preferably get life insurance to counter the omnipresent threat of terrorism hence in the unfortunate scenario of death or major disability, your family gets financial support to continue their everyday life without being interrupted abruptly. Ideally you should buy a cover that provides you around 5 to 10 times of your annual income in monetary compensation and if you have any loans or liabilities then it should be around 15 to 20 times to provide enough timeframe for your dependents or next of kin to cope up and become stable.

Property Insurance:
Next in the line of assets in terms of value is usually one’s property. You should get insurance cover for your property be it for business purpose or residential. It protects damage to property and personal possessions in the case of terrorism and incidents of explosions or fire etc. Choose a policy that covers these incidents under terrorism to ensure adequate compensation.

Car Insurance:
Going forward, let’s talk about cars. Usually these are the most valuable assets after property and should be insured. For those people who live in such areas where terrorist activity is imminent, it’s advised that they opt for comprehensive car insurance instead of just third-party insurance to make sure that their car is safe from risk of fire, damage, arson, terrorist attacks etc. And in case of total loss you’d be reimbursed as per the depreciation and current market value. We’ve our car insurance portal where you can get real time quotations for your new or used car and compare different policies and buy an auto insurance plan online too!

Conclusion:
Lastly we should also mention that these policies do not cover biological, chemical or nuclear attacks. However it’s still encouraged that you opt for the above mentioned insurance plans to minimize the loss of money and property as well as get some compensation against loss of life or disability even though there’s no true replacement of life. Also buying insurance policies for property is a really sane idea because in case your area needs to be evacuated for any military operation, chances are that your property will sustain damage. Government is supposed to compensate people for any losses occurred but as the situation prevails in Pakistan expecting anything from the government within due time would be equal to blowing a trumpet in front of a buffalo. Thus you should consider taking matters in your own hands and ensure that you and your loved ones have a safety cover in case the worst happens though here’s hoping that such a time never befalls upon us however the wise man said that “Prevention is better than cure” and that says it all!

Khurram Zahid

The post Living Near PAK-IND Border? Here’s Why You Should Consider Getting Insurance appeared first on Smartchoice.pk.

Let’s take things in a chronological order. You have just completed your academics and stepped into professional life and have got a job that lets you earn enough that you can save a little out of it. A very wise idea at this moment in time is to get a life insurance policy as it’ll give you the longest possible amount of time to save up and since you are at a point in time where you don’t have any dependents (or have the least amount of dependents in case of parents) you are able to save more as your expenses are comparatively lesser than someone who is married and has children. Insurance policies typically don’t cost a lot and thus it’s relatively easier to pay the premium. At this time you should ideally be looking at obtaining a policy that lets you accumulate your wealth over a period of time.

Supposedly you’re out of the age bracket when a person is just stepping into professional life. You’re married but don’t have children yet. At this point in life you have a multitude of options to choose from. Getting a retirement plan or a family insurance plan is a good idea as it will cover your dependents as well as help you have a good return by the time you retire and thus you will not be burdened by the worry of financial woes when it’s finally time to sit back and have some time for yourself.

Next comes the scenario where you are married and have one or more kids. Every parent has two dreams for their kin. One is to achieve a good position in academics and the second is to get them happily married off. For the first situation the best way is to invest in an education plan that will cover your child’s educational expenses in case of death or disability or loss of job. Also it can act as a fund to pay for the university fee if your child plans on studying abroad. It’s equally important if you’re planning for your daughter’s marriage as it’s the biggest event of her life and you’ll want everything to be perfect so she starts her new life with utmost joy and happiness hence a suitable marriage plan will help you accomplish all these things.

Last but not the least let’s talk about insurance plans for women. In yesteryears, insurance products were only aimed at the male part of the society as they were considered the sole breadwinners for the whole family and everyone else was thought of as a dependent. However in recent times, women have become an active part of the workforce as well as housewives have gotten more recognition for their efforts thus insurance providers have also come with plans that are made exclusively for the female part of the society.

We feel that life insurance is a really useful product in various scenarios and it’s never too late to get such a beneficial product and you should really take it into consideration to enjoy your life with complete peace of mind. SmartChoice.PK is an online price comparison platform that will soon let consumers in Pakistan compare and order insurance policies online as well as order a policy of your choice.

Khurram Zahid

The post The Right Time To Get Life Insurance Is NOW! appeared first on Smartchoice.pk.