page loader

Life Insurance

Life Insurance Explained

Life insurance is an agreement with a company that provides financial support to families in situations in which the policyholder becomes seriously ill, disabled or dies. Normally a policy is purchased according to the particular needs and objectives of the policyholder.
Plans are tailored to those who have dependants so as to ensure that, should a breadwinner pass or become gravely ill, his or her family won’t suffer financially. Additionally, these kinds of policies suit people who are not in a position to depend on government assistance if a tragedy were to occur.
It isn’t a particularly difficult task to choose a policy that fits one’s needs. Once accomplished, it is just a matter of paying monthly or annual premiums consistently and in a timely manner. If the policyholder passes away, then the insurance company compensates the named beneficiaries the amount specified in the agreement. (One can opt to receive funds in installments or in form of a single large payment. )

The Main Kinds of Life Insurance:

Term Life
This type of policy can provide financial protection over a certain named period of time, usually 10 or 20 year periods. The premiums normally stay the same for the period of coverage. Term life policies are less costly as compared to other kinds of coverage.
Universal Life
This is type of policy is of a permanent kind and is engineered to provide a lifetime of coverage. It is also more flexible as the covered person may lower or raise the premium payments over time. Due to the nature of coverage and benefits, these policies tend to be more expensive.
Whole Life
This also is permanent coverage (as long as premiums are kept up of course) and offers a lifetime of protection. The premiums, however, remain fixed regardless of the circumstances. This form of coverage can also act as a savings device for the insured and accumulate tax-deferred funds over time.

Big Benefits

One can utilize these policies as financial planning tools to help preserve one’s wealth and eventually pass on potentially significant funds to beneficiaries. These policies also can provide a large amount of cash to beneficiaries to help deal with financial issues that often can be the result of an insured person’s death. There also can be an element of favorable tax treatment compared to other kinds of policies and, in some cases, flexibility for policyholders as death benefits can be changed and premiums increased, lessened or even skipped.