Many individuals are aware of the most important advantages of getting life insurance: If you die unexpectedly, your family gets money, and you get the peace of mind that they’ll be able to carry on without you. While those advantages apply to all types of life insurance, there are additional benefits that vary based on the type of policy and quantity of coverage you obtain. There are additional advantages for women.
Life insurance is an agreement or contract that involves an insurer and an insured. This is kind of contract whereby the insurer pays an amount of money to the survivor of the insured. Life insur- policy ensures that the insurer pays a particular sum of money to the beneficiary of the insured after his/her demise.
In other to make the agreement possible or to enforce the contract, certain things need to take place. The present health conditions of the insured and also the past must be disclosed strictly in the life insur- application. The life insur- application must also disclose the high-risk activities the insured participates in.
It is an insurance that pays a death benefit to the insured’s donees when the insured dies. This is made possible under a legal contract. In other for life insur-policy to be effective, the insured must make a payment of a single premium up front. The insured can also pay regular premiums over time.
After the death of the insured, the beneficiary named in the policy, will get the death benefit or the policy’s face value. Term life insur- policies looses validity after a long period or certain number of years. While permanent life insur- policies remain valid until the policy holder dies, give up the policy or stop paying premiums.
It is to note that the financial strength of an insurance company determines the benefits of the insurance policy it issues.
Types of life insurance
There are many types of life insur- obtainable and accessible for all kinds of needs and preferences. A policyholder can select temporary or permanent life insu- base on the short-term or long-term needs of the policy holder.
The following types of of life insur- include; Term life, permanent life, universal life and variable life insurance.
Term life insurance
This type of insurance remains valid only for a certain number of years. When you take out the policy you select the term, known terms are 30, 20, and 10 years. The term life insur- policies with long term financial strength are considered the best.
Decreasing term life insurance
This type of insur- is a renewable or extended term life insur-with coverage, that decreases over the policy at a preset rate.
Convertible term life insurance
This type of life insur- that gives the policyholders a room to change a term policy insur- to permanent insurance.
Renewable term life insurance
This type of life insur- policy can be renewed yearly and a quote is given for the year the policy was purchased. In this type of insurance, there is an annual increase of premiums and this term insurance is the least expensive.
Permanent life insurance
This type of life insur- remains effective all through the life of the insured, though there are factors that can distort this. These factors are; if the insured stops paying premiums or give up the policy. This type of life insur- is usually very expansive and also more expensive than the term life insurance. There are different types of permanent life insur- and they are;
Whole life is a type of permanent life insur- that amass cash value. Cash value gives room for the insured to utilize the cash value for different intents or purposes. This purpose includes; to pay policy premiums or a source of loans.
This type of permanent life insur- has flexible premiums, and also it consist of cash value elements that earns interest. The premiums can be changed or adjusted over time unlike the term and whole life. It can also be made with an increasing death benefit or level death benefit.
This is a type of universal life insur-. It allows the insured to acquire an equity or fixed-indexed rate of return on the cash value constituents.
In this type of universal life insurance, the insured is given a room to invest the cash value of the policy. The policyholder or insured can invest in any obtainable and accessible separate account. The variable universal can be made with an increasing death benefit or a level death benefit and it consist of flexible premiums.
The benefits of various types of life insurance
Term and permanent life insurance, such as whole life, are the two most common types of life insurance. A term life insurance policy requires you to pay a certain premium for a set period of time (say 10 years). A death benefit is paid to your beneficiaries if you die during that time, but once the term is up, you must either get fresh coverage or go without. A whole life policy is long-term life insurance that covers you for the rest of your life.
What are the benefits of purchasing term life insurance?
- Lower costs are more common.
- It’s easier to comprehend because it’s solely an insurance product.
- It may be convertible to a lifetime contract – but make sure before you buy.
- You have the option to walk away if you no longer require it or cannot afford it.