page loader

Life Insurance

A Guide to Life Insurance Coverage

If anything untimely and tragic were to ever happen to you, (namely your death), certainly knowing that your family is protected financially, not just from funeral expenses but in the provision of income you no longer can provide, would be an extraordinarily important benefit. Good life insurance is the very tool that can provide such a benefit to your loved ones in the event of your death.

Life insurance is a kind of policy that pays out to your family (or any and all designated beneficiaries) in the case of your passing. The amount paid out depends on the death benefit chosen at the time of the policy purchase. Once awarded, the funds can be used in any manner the beneficiary sees fit.

How it Works

Prior to the insurance policy being obtained, the policyholder will determine the level of the death benefit as well as the beneficiaries. The amount of the premium paid for the insurance policy is determined by the death benefit amount. Premiums can be paid every month, quarterly, every six months or every year.

Types of Policies Available

Term Life is a kind of policy that is held for a certain finite term. This term can be 5, 10, 15, 20 or 30 years. Upon the death of the policyholder, a benefit is paid out. Should the policy come to an end, the policyholder must buy a new policy to continue in the provision of its protection.

Whole life policy premiums are paid during one’s entire life. These plans tend to be substantially more costly than term life but they go further by providing not just death benefits but also in accruing a cash value over time that can even be borrowed against. Some people buy whole life policies and take out the cash value as they feel necessary. The borrowed funds can be returned directly or removed from future cash values as premiums are paid over time.

Universal life is similar to whole life policies but they provide more flexibility to the policyholder. One has the freedom to adjust the death benefit, change the premium, the term or the cash value as desired. This is the most costly type of plan.

Conclusion

Arguably, the main reason for life insurance is the help in paying for burial and funeral costs, but those who are head of households will often buy bigger policies so loved ones will not have to worry about keeping their heads above water after the policyholder dies.






Share: