What is life insurance?
Life insurance is a financial product you purchase in order to protect your family. It is basically protection from the financial loss from the ■■■■■■■■■ death of an insured.
Life insurance is a contract between an insurance policyholder and an insurer, where they promises to pay a designated beneficiary a number of money or lump-sum payment in exchange for a premium, on the death of an insured person.
Life insurance is an integral part of the average person’s comprehensive financial plan and this is especially true for families who have children to care for.
Typically life insurance is chosen on the basis of the needs and goals of the owner. While people who purchase life insurance hope they never need it.
This kind of coverage is crucial for consumers who want to sleep well at night without worrying about the future of their children and family. After purchasing this they will not worry at all about what might happen to their family and children if they pass away.
What are the advantages of life insurance?
1. First of all, it gives you inner peace because you become so relax and you will not worry about your family and children in case if you pass away.
2. Life insurance provides funds for your children’s college education.
3. Death benefits are generally income tax-free to the beneficiary.
4. Life insurance is cheaper and easier than you think.
In permanent life insurance coverage lasts a lifetime, but can be costly.
Term life insurance covers you for a fixed number of years, and it is surprisingly affordable.
5. Life insurance plans give you the ability to lock in low premium rates while you are young.
If you buy the same policy when you are older, you will be paying a much higher premium compared to if you bought the same plan when you were younger.
6. Provides for the continued success of the business.
7. Life insurance encourages saving habits.
*8. Easy settlement protection against creditors
9. Life insurance is suitable for raising loans.
10. Life insurance helps to achieve long term goals, also take care of loved ones.
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What are the disadvantages of life insurance?
1. Disadvantages of life insurance arise when it is used as an investment product.
2.The life insurance acquisition process can be annoying and perplexing ( For example: Is the life insurance agent trustworthy? Is this the right product and carrier? How can be medical underwriting be streamlined?)
3. There is a risk of not paying policy.
4. Policies containing restricted clauses are not acceptable
5. Mostly life insurance policies can be expensive if you are unhealthy or old, so some people can’t afford them. So here your health is only concern because if you are unhealthy you might have a significant burden on your medical bills.
6. Cash surrender values are usually less than the premium paid in the start several policy years and sometimes policy owner may not recover the premiums if the policy is surrendered.
7. There are few things about life insurance that are not straightforward, so it is easy to be misled if you are not well informed.
What is the best age for life insurance?
You need to be 18 in order to purchase life insurance in many countries and for this, you also need a bank account so that you can pay the monthly or annual premiums.
Mostly you can get the best rates at your 20s or 30s, because an insurer is taking on less risk when insuring a young person in good health.
For the individual with the little dept and no dependent family, this kind of term life insurance is often unnecessary. Some life insurance policies allows a return of premiums, fewer fees and the expenses if the insured outlives the policy.
However , very few companies will issue a policy past age 85 and some set their maximum age at issued to age 80 or 75. There are several different types of life insurance available to seniors who have not reached that maximum age, some of which remain in force until death.
What are the types of life insurance?
TERM LIFE INSURANCE:
It is sometimes called “PURE LIFE INSURANCE” because there is no cash value to the policy. Term life insurance is mostly recommended because it is inexpensive, straightforward, and supports your loved ones over the long-term if you die. And the death benefits of long term life insurance are mostly tax-free.
It lasts for a number of years before it expires. If you die before the term is up, a number of money is paid to your designated beneficiary known as a death benefit.
WHOLE LIFE INSURANCE:
A whole life insurance is the simplest form of permanent life insurance and it lasts for your whole life. Like other estates or inheritances, It can satisfy your specific needs Like permanent life insurance, it includes a cash value component, and each month you pay your premium to the insurance company. A portion of this premium goes into your cash value and grows over the whole life insurance. You lock in premium as long as you want the policy, the longer you own the policy, the more cash value it has.
On the other hand, whole life insurance is typically more expensive and complex.
PERMANENT LIFE INSURANCE:
Permanent life insurance continues until you die or quit paying your premium. It simply tries to provide the benefits of your life insurance ( paying your beneficiaries at the event of your death) and provides you and your loved ones long-life protection.
UNIVERSAL LIFE INSURANCE:
Universal life insurance is just a kind of permanent life insurance and work like whole life insurance that your premiums go towards both cash value and death benefits.
*Universal life insurance may be a better option for younger people who are looking for permanent insurance as well as for those who are unsure of their future needs.*
VARIABLE UNIVERSAL LIFE INSURANCE:
Variable universal life insurance trying to be a savings account and a mutual fund all at once that it gets expensive. You can adjust premium and death benefit amount while investing the cash value in the policies cash value like mutual fund.
VARIABLE LIFE INSURANCE:
Variable life insurance has a death benefit and cash value like whole life insurance.
Variable life insurance is more akin to investing. The money paid into, it goes into a series of mutual fund-like sub-accounts where you may grow but you may be at loss sometimes depending on the market.
SIMPLIFIED ISSUE LIFE INSURANCE:
Simplified issue life insurance is designated for the older applicant or those with serious health problems who not qualify for policies who require medical exams.
GUARANTEED ISSUE LIFE INSURANCE:
Guaranteed issue life insurance generally offers low death benefit options with higher than normal premiums. They require a medical exam as just a part of the application process.
FINAL EXPENSE INSURANCE:
Final expenses insurance is a form of insurance which aim is only to cover the end of life expenses such as ■■■■■■■ or burial cost
GROUP LIFE INSURANCE POLICY:
Group life insurance is a policy that covers a number of groups, or the number of people in a single contract. Postal life insurance provides group insurance coverage to the employees of government, public and private organizations.
Group life insurance provides life insurance cover to each member of group. In the event of the death of any member, during the currency of the contract, they committed to pay the sum assured promptly to his nominated beneficiary.