Life Insurance Advice

Life Insurance or assurance is a legal contract between the insurer or the insurance company, and policy owner/ holder who is the person availing of the plan and whose family will receive money upon his/her death or any other event such as terminal disease. These are purchased often by many people.  They can also be costly.

These are two important terms to remember.  Premium, it is the amount paid to the companies for an agreed amount of time to ensure that beneficiaries receive the insurance claim after the death of the policy holder.  Beneficiaries are usually the family members of the policy holder, who will receive the payment from the insurance companies when the policy holder dies.

The main idea of life insurance is that companies use the money from premiums to be invested in other businesses. Companies profit from the investments made and, in turn, shares them with the family of the deceased when the time has come.

For many individuals, procuring a life insurance plan can be a struggle.  There are many plans out there that promise to pay even up to a million dollars but proceed with caution.

Studies have shown that approximately 20% of individuals who buy permanent policies lose them within two years and 50% within 10 years because they could no longer pay for them. Take note that there are term and permanent life insurance plans.

A group term insurance is offered as an employee benefit. There is no physical exam needed, all you need to do is sign up if it is in the benefits program of the company.  Payments are deducted automatically from the payroll and rates are quite affordable.  An individual policy is owned by the person himself/ herself and it requires a medical exam.  Most insurance companies will also request permission to conduct a background check on any criminal record including driving offenses.  Even if you change employers, you are assured of life insurance protection.  Most plans can be paid well within a 10 to 30 year period.  There are more options compared to a group plan, like being able to change it into a permanent policy.

It is important to know that if a term expires, plan holders do not get money. Instead they can be offered an upgrade which allows a holder to trade an old term policy with a new permanent one.  There will be an increase in the premiums when this happens.  When an individual is still healthy and would like to remain covered, the best choice is to get a new policy.

In order to be certain that you are availing of the correct plan, follow these simple steps.  Review your budget and check within what premium range you can afford to pay.  Bear in mind that these policies have to be paid for many years.  If payment is discontinued, that policy might be lost all together and would just be a waste.  The insurance requirements of families change periodically during marriage, the birth of children, and purchase of a new home.