Thus, the customers increase insurance coverage when they get married or have a baby. However, people renegotiate such agreements in a downward direction when their savings and financial independence increase.
To calculate the cost of the insurance policy, the following equation should be adopted: the current financial situation plus life insurance premium are equal to the costs to all loans cover and money for a worthy existence of a person and his family.
As the client’s savings account grows, the insurance policy size may be reduced. However, it is unwise to reduce the guaranteed amount of payments too much, according to experts. Life insurance companies developed the “Life Insurance Ladder” product for these purposes. This option allows purchase policies with different terms, when one ends, the other comes into effect. For example, by signing a contract with an insurance company for 30 years, you can divide it into three terms. The first includes: a retirement plan, additional payments in case of repayment of a mortgage loan and payments to the family in case of an insured event. The contributions during the second 10-year term cover only retirement annuity and payments in case of force majeure. When children grow up (during the third term), the client will pay the LIC even less as his dependents become independent. Thus, by the age of 60, a person can have an impressive retirement account.
This is just an approximate strategy that may vary. After all, people have different requests.
Source: https://www.cnbctv18.com/personal-finance/a-life-insurance-ladder-can-save-you-money-4642681.htm
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