FAQS

“What is Life Insurance?”

Life Insurance is a contract between you and a life insurance company, which provides your beneficiary with a pre-determined amount in case of your death during the contract term.  Buying insurance is extremely useful if you are the principal earning member in the family. In case of your unfortunate premature demise, your family can remain financially secure because of the life insurance policy that you have purchased. The primary purpose of life insurance is therefore protection of the family in the event of death.

“Do you need life insurance?”

If you have dependants and financial responsibilities towards them, then you certainly need insurance. Having a family means dependants, which, in turn means financial commitments. Financial commitments come in the form of loans, children’s education, medical expenses etc. Imagine what would happen if you were to lose your life suddenly or become disabled and cannot earn. . Being insured in a situation like this is a necessity.

“How much does life insurance cost?”

In order to buy a life insurance policy, you must pay premiums to the life insurance company. The amount of premiums payable depends upon the type of policy, term of policy contract, sum assured and your age. You could pay these premiums monthly/ half-yearly/ annually/ or as a single premiums.

“How much do I insure myself for?”

One of the simplest rules is to assume that insurance is a replacement for your lost earning capacity. Calculate your total income for the years that you expect to work.

Assuming that the prevailing interest rate is 8%, you need to insure your life for at least 12 times your current annual income. Assuming that a family needs Rs.100 annually for household expenditure and the rate of interest would be at 8%, then the breadwinner needs to have a life insurance policy of approximately Rs.1200. If the insurance amount were to be put in the bank by the family, the family would get a comfortable Rs.96 p.a., which would at least let the family maintain the current life style.

However to calculate your insurance need more precisely, use the following steps:

Calculate Monthly Livable Income required (Post tax). This is the monthly amount that the survivors of the policyholder will need in the event of his death. This is taken at 70% of the current total family expenses. Denote this as “M”.
Calculate Monthly Income required (Pre tax) as M/ (100-t)%. Denote this as “M1”. Here t = Tax rate.
Calculate Annual Income (A) = M1*12.
Assume Estimated-earning rate on capital as 8%. Denote this as “r”.
Calculate Capital livable income required (C ) as A/ r%.
Subtract Existing Insurance Cover amount (if any) from “C”.
The final amount you arrive at is the amount for which you should buy insurance.
“What is Term Insurance? ”
Term Insurance, also known as pure life cover, is the cheapest and the simplest form of insurance. Under this insurance policy, against payment of regular premium, the insurer agrees to pay your beneficiaries the sum assured in event of your premature death. However, if you survive till the end

Welcome to Pacific Group (EA) Ltd. ISO 9001:2008 Certified

Pacific Insurance Brokers (EA) has received its ISO 9001:2008 certificate. This was a fine moment of joy and jubilation to be among the few Insurance Brokers who have received ISO certification. We believe our certification is a prove that we have come of age and that our dream to become the leading most reliable insurance brokerage house in the region is not far fetched. We are committed to our clients in providing valuable and professional services without compromising the principles of insurance.

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