Life insurance is believed to have originated in Rome and India and is based on the fundamental premise of securing and protecting loved ones from paying off debts and providing for family when the care provider is deceased.
It is a contract between an individual and an insurance company leaving detailed instructions on how the company should pay the policy holders’ when they pass away.
Of course if you are single with no dependents or elderly with children that do not need to be taken care of you are less likely to need a life insurance policy.
On the other hand if both you and your partner are employed it’s always good to set one up to guard against the unforeseen.
Taking preventative steps to ensure your loved ones are taken care of makes perfect sense but what are the disadvantages?
The life insurance acquisition process can be lengthy and at times complex. The purchase of life insurance based on whether it’s for a business or family requires careful consideration. And of course, there is a cost involved.
However on the plus side a life insurance policy can be exchanged for another life insurance policy without incurring taxation. Also the cash value grow tax deferred during the policy holder’s lifetime, and of course your family is protected.
The key reasons people opt for life insurance are to fund their children’s education. This is followed by covering any final expenses such as funeral costs, car payments and mortgage payments.
The two main types of life insurance cover are;
This type of cover can also be called level-term assurance. The payout would be the same no matter when the policyholder died during the term.
This is a very popular kind of cover because it pays out a lump sum or a monthly income if you die within a set period of time but if nothing happens to the policyholder it simply lapses and they get nothing in the end.
This is a life insurance policy that covers the policyholder for the insured’s whole life and requires (in most cases) premiums to be paid every year into the policy. The proceeds of the policy will usually go to the policyholder’s family or beneficiaries of their estate. These policies are more expensive than term assurance policies, which only pay out if you die within a certain timeframe.
Interested in getting one now, but don’t know how?
First you have to understand how the insurance premiums work. If you are likely to die in the near future you’ll have to pay more but the insurers look at certain factors which could affect your premium. These include your lifestyle, age, medical history and job.
There is a raft of choices these days for getting more information and costs, from your employer to cost comparison sites and your bank. Ask friends and family too as recommendations are often the best route to take.
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