The Basics on Getting a Life Insurance

Talks and discussions on life insurance are usually unpopular and seldom being engaged in.  The mere thought of assertive agents pushing their insurance policies and how you really need to have a life insurance makes one cringe and wish he is somewhere else talking about something entirely different. Still, it is beneficial to be knowledgeable about life insurance, especially if one is interested in availing one.

So what is life insurance? This is basically the primary question of every individual when dealing with this kind of matter. A life insurance is a coverage that pledges a sum of money to the insured after his/her death or to the declared beneficiaries at a certain age. In layman’s terms, it is a kind of an insurance that compensates for someone’s death by means of financial returns.

Getting a life insurance is not mandatory; however, it is advisable to have one given that it is somehow of a financial assurance for one’s self, especially if he/she has a family or people depending on him/her. It is especially useful and beneficial, for in case of unforeseen emergencies and untimely deaths, the family of the insured is guaranteed to acquire monetary help from the insurance company, depending on the policies that the customer paid for.

The advantages of getting a life insurance are not limited to the customer’s dependents but are also extended to benefit him/her. This is because an insurance can actually be used to pay for death taxes and estate settlement costs, to transfer wealth from one generation to another, or to support and help charities. Fact is, everybody has different needs; thus, there are different kinds of insurance policies out there that can cater to every individual.

The term life insurance policy is the simplest and most affordable type of insurance and is generally used to cover debt or loan repayment. It has the lowest premium in its starting stages; however, it gets more expensive as the individual gets older. And there’s a catch: in order to get the benefits, the death of the insured should happen in the time frame in which the policy is in effect; hence, if that’s not the case, the insured wouldn’t get anything from the insurance. There are renewable and non-renewable types of a term life insurance – from the name itself, renewable policies enable the customer to automatically re-qualify and continue to use the policy even after the original term is finished. Non-renewable policies, on the other hand, don’t have this kind of characteristic; thus, one must re-avail and re-qualify for another policy.

Meanwhile, the permanent life insurance, or whole life insurance policy, provides coverage throughout the insured’s lifetime. Moreover, juxtaposed to term life insurance policies, permanent life insurance policies provide death benefits without limitations from the time frame and offers the feature of cash surrender value or simply cash value. Cash values can accumulate and can be accessed by the policy owner in case he decides to stop the policy. Generally, this type of policy is more expensive than term life insurance policies. This is to ensure that the premium for the insurance relatively stays the same through the years. There are other variations of this type of policy, one of which is the universal life insurance. It is comparatively the same with whole life insurance, except that it is more flexible in the sense that the policy owner can choose the premium he/she would like to pay for. Consequently, the death benefit would be adjusted to match the premium payments made by the individual. Another type is the variable life insurance, wherein the cash surrender value can be used for other investments to attain possible higher income than what would have been. The death benefits would vary depending on the performance of the investments; good performance means a better benefit while poor returns would result to a decrease in death benefits.