Life insurance is an essential pillar of an individual’s personal finance arena and deserves utmost care by every household.
Are you always worried about the consequences your death would inflict upon your loved ones? Have you been losing sleep over the high premium costs of life insurance? Do life insurance advertisements on TV make you sit up and take notice? If the answers are in the affirmative, these 7 facts about life insurance would help you to understand its importance:
1. If your Family Members Depend upon you, Get your Life Insured
If you are a spouse, a parent to dependent children, a child of parents dependent on you, an employer, an employee, owner of a business partnership, or just about anyone else, you definitely need a life insurance for yourself.
2. Life Insurance won’t Apply Monetary Value to your Life
Life insurance is something that accounts for compensating the inevitable financial effects that arise due to the loss of life. Strategically, this kind of insurance is designed to help the dependent family members of the deceased insured person to cover the costs of outstanding debts, final rites expenses, planned expenses for education, and lost income.
3. Life Insurance is nothing More than a Policy
Life insurance is purely a contract between a company providing life insurance and an individual who is worried about the financial interests of dependent survivors in the event of his/ her death. The company accrues insurance premiums from policyholders and pays “death benefits” which are in the form of claims generated in case of the insured’s death.
4. Four Primary Players
There are basically four role players in case of a life insurance- the insurer, the insured, the owner and the beneficiary. Insurer is the company that provides the insurance and is responsible for disbursing claims in the event of the insured person’s death. The insured is the person whose life is the basis for the insurance. The owner is the one who pays off the premiums; and the beneficiary is the individual (or trust) who is supposed to receive the claims in the event of the misfortunate event taking place.
5. It’s a Tool for Risk Management and at all an Investment
It would not be wise to consider life insurance as an investment option, although, some life insurance policies might consist of basic and advanced tax privileges.
6. Two Varieties of Life Insurance
Life insurance policies are available in two broad forms: term and permanent. Term life insurance is the simplest and the cheapest policy where an insurer bases the premium on the death probability of the insured within a specified term, usually 10 or 20 or 30 years. On the other hand, permanent policies also take the probability of death in, but are inclusive of a savings mechanism to add more value to the instrument.
7. Consider a Living Person for your Death Planning
There are several tools available online that can assist you in getting an idea of your expenses in a life insurance policy. Once you acquire that, it would always be effective to contact a real, living agent who will assist you in the entire insuring process. Indeed, selecting an experienced and dedicated broker would help you in saving money by helping you opt for the best policy option after considering your present situation.
Although most people would not like to talk about life insurance as it is related to their death, proper planning for an unexpected death would keep their family members financially secured in future. It is not at a bad idea at all!
So get your life insured and secure your family financially ‘after you’.