We can die anytime. It is important to think about the people behind us in terms of the financial burden they will face. Therefore, this is where life insurance plays its part. It eliminates the burden for your family.
Types of Life Insurance policies:1.
Term life insurance policy: Term policy is low on pockets as it has low premiums attached. It’s for a term i.e. 10 or 20 years. It is advised to get a 20 years term policy as by that time frame your kids are capable enough to fulfill their own needs.
2. Whole life insurance policy: This policy has a higher cost. Some people use it in the form of investments. This is not considered to be a good investment as the returns are between 1%- 4% which are comparatively lower than that of the market.
Lessons about life insurance:
1. Get the insurance at an early age to save costs. The older you get, the higher the premiums.
2. It is recommended to have a term life insurance policy of 10 times your income.
3. For stay at home moms, get life insurance, especially if you have younger kids. If God forbids anything to happen to you, your husband will need it to take care of children.
4. From an Islamic perspective, there is no proper guideline mentioned in Quran or hadith. The policy is something new and is practiced in Islamic countries. Allah is the planner and He is responsible for rizk but Islam also teaches us to work hard and plan for our future.
5. If you have a whole life insurance policy you have premiums that you are investingsomewhere. Make sure the investments made are Halal.
Insurances that are important to have:
1. Auto and Home: It helps you save money by choosing a higher deductible policy that would decrease your premiums.
2. Health Saving Accounts (HSA):This is also known as a triple advantage account. It has three tax advantages: The contribution you make to HAS is tax-free Growth is tax-free If you use if for medical expenses anytime, it’s tax-free and there is no fee attachedAt the age of 65, if you take money out of HSA for other purposes, you will pay tax on it but you will not have to pay a 20% tax penalty.
3. Long Term Disability Insurance:This is a must for higher-income individuals to save them from any sort of futureconsequences that might occur due to disabilities.
4. Long Term Care Insurance:For those over 60 years, this insurance helps to cover expenses of being in nursing homes.
Insurance is to protect yourself from financial loss. Try to get life insurance for yourself and spouse before any other investment. Insurance on devices and appliances is a waste of money and time. People should avoid getting such insurances.