What Is Life Insurance?
The very reason why you continue to strive and earn a living is because of this: Love. When you love someone, be it your wife, husband or children you always think about what would be the best for them. You want to give them the best that life has to offer. Yet sometimes, things won’t happen the way you would want them to be. Especially if it would mean that you would leave them behind. If that time comes, you want to make sure that everything else would be okay for those that you’ll leave behind.
Have you ever asked yourself this question? If I die, what would happen to my family? Will they be able to cope up with life’s hardships? The answer, one thing is for sure. Life will still go on for them no matter how painful, no matter how bitter it may seem. Yet, you can make it easier and simpler for them. How? By having life insurance, your family and loved ones will be able to go through life’s financial difficulties with ease.
What exactly is life insurance? Life insurance is a type of insurance that pays money when the insured person in the policy dies. It is a contract between the person insured and the insurance company where the insurance provider would pay a certain amount of money to the beneficiaries of the insured person so long as the insured person’s premium are current and up to date.
The next question you might be asking next is, do I need insurance? Usually people with families and loved ones that they want to provide comfort when sudden situations or emergencies arise would say yes. Having life insurance is a form of relief from financial troubles when a major turn around in life takes place. You may think that life insurance is for old people who would have the tendency to use it more than the younger generation does. Unfortunately, accidents and sickness that eventually leads to death can happen at any point in life regardless of age.
The reason why people need life insurance is to care for your loved one when your partner or loved one dies. Life insurance is a way of continuing support and care for your loved ones left behind, making the financial difficulties of living without you a little easier to handle. Life insurance is not only for those people who have families to take care of. Even single people should have life insurance as it would ensure that all your expenses in connection with hospital and burial are well handled. Having beneficiaries doesn’t mean they have to be blood relatives. Beneficiaries can be your best friend or even a charitable institution.
As well, there are certain types of life insurance that carry a cash value. This type provides you with a valuable asset that can be used as a bond on loans or even against the policy itself when the need arises. There will be times in your life that having a cash value in your life insurance would be a great help to tide you over during these hard times.
There are four basic types of life insurance. They are term life insurance, whole life insurance, universal life insurance and variable life insurance. Familiarizing yourself with these four types would let you choose the best type of policy for you.
Term life insurance is a direct or clear-cut type of policy. This type of coverage lets you pay for a specific period of time. During that particular period, any beneficiary you choose will receive the benefits of your policy when you die. There are subcategories that fall under term life insurance. An example is you have the option to renew your policy every year.
However, since the price of the policy and premiums may go up higher every year as you get older, you may want to choose the guaranteed level term life policy. As this type of policy would have the same price range from 5 to 30 years depending on what you choose. There is also another type of term life policy called return of premium life insurance or ROP. This type of policy would pay you at the end of the term, provided you are still alive. Upon your death, the term of the funds will go to your chosen beneficiary.
Whole life insurance is another type of insurance that you may want to check out. As the name suggests, it covers you for your whole life instead of a specific term only. Although a whole life insurance policy would cost more than term life policies, the investment power and coverage are more attractive to some insurance shoppers.
Universal life coverage is when an insured can add a preferred amount to the minimum price o the premium. The insurance company in return would invest the money with returns that are put back into the premiums or can also be left to build up. A subcategory of universal life insurance is universal variable life that gives the insurer to choose what they want to invest in rather than the insurance company deciding for them.
Variable life insurance coverage gives you more opportunities to invest including stocks. This policy is similar to universal life coverage because the returns are either used towards your premium payments or allowed to add up in an account. Your beneficiary will either receive the value of the policy, or the value of the policy in addition to a portion of, or the full cash investment returns account.
Remember, life insurance policies should offer you protection and security to you and your family as well as provide ease of mind and comfort when you need it. To choose the best type for you, always speak with a reputable insurance agent or provider that would answer any queries you may have.
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