The worst may happen. You lead a blissful family life. You have a beloved wife, two kids and other loved family members. But one day suddenly you die in a road accident. Have you ever thought what would happen to your wife and children? In this world nobody has a risk free life. But the thing that will bring a little shower and give protection and security to your dependents is a life insurance policy. Furthermore, it is life insurance that will protect your home mortgage. After your death your family might not leave the house if your life insurance might pay off the mortgage.
A life insurance policy will play a vital and valuable role at virtually every stage of your life. If you have dependents or other people with whom you share your life, a life insurance policy is a must for you.
Life insurance can simply be defined as an agreement between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual's or individuals' death or other event like terminal illness or critical illness. In return of these services, the policy owner agrees to pay a stipulated amount called a premium at regular intervals or in lump sums. In a life insurance policy the insured event must be based upon the lives of the people named in the policy.
Here follows the details on life insurance.
Two basic types of life insurance
Primarily life insurance is of two basic categories: temporary and permanent.
Temporary life insurance:
Temporary life insurance or pure assurance is the type of life insurance, which provides for a specified term of years for a specified premium. Under this policy the insurer is bound to pay cash benefits to the beneficiary if the policy owner dies. Temporary life insurance only gives assurance in the event of death and nothing else. In a temporary life insurance policy premium can be for one or more years. Annual renewable term, for example, is one type of policy where your policy is automatically renewable each year up to a specific age limit.
Another sub-type of temporary life insurance is mortgage insurance, which gives protection for the policy holder's family, where mortgage will be paid if the insured dies.
Permanent life insurance:
Permanent life insurance is the type of life insurance policy, under which the policy owner will have to pay until the policy matures. A permanent life insurance policy also cannot be canceled by the insurer for any reason except fraud in the application, and the cancellation must occur within a period of time defined by law. It includes insurance, universal and Limited-pay insurance.
Life insurance coverage:
Before you go to open a life insurance policy, you should know about the life insurance coverage. There are at least eight different areas that a life insurance may cover. They include family coverage, business coverage, health coverage, retirement coverage, mortgage coverage, property coverage, loan coverage and life insurance coverage for landlords.
So, buy a life insurance policy and have a secured life.
Have you ever considered that when you buy life insurance you increase your spendable income? We all have responsibilities that we pay special attention to. We have to save for retirement. We must create an emergency fund, just in case. Surely we take care of our bills thereby maintaining a decent credit rating. These needs don't go away because we are no longer here. The survivors have the same things to think about as we do now. Adequate life insurance can make it much easier on them.
The Family
If we are married and have young children the need is dire for adequate life insurance coverage. The family is going to need the income that we will no longer be here to earn. The mortgage or rent still has to be paid. That insurance premium that you now pay to cover the house in case of a fire or may be a hurricane still needs to be paid. The health insurance policy will still be needed...
The surviving spouse and children still need to eat. They still need to wear clothing. The children still need to participate in those extra curricular activities that you so enjoyed paying for while you were here earning the income. They need a car and they will still have all the expenses that this includes like monthly payments if money was borrowed to buy this car. The car has to be insured and maintained. It will need gasoline and oil to keep running.
The Business
If you own a business whether a sole proprietorship, a partnership or a corporation you need life insurance. The sole proprietor and the owner are one in the same therefore all the debts incurred by the business are debts of the owner. Life insurance is needed in partnerships and corporations to fund buy sell agreements and for key employee insurance.
If we have all things covered we have a little less to be concerned about. We have funds available that we could not touch if we did not have that life insurance policy. Of course we need to invest and we must plan for retirement. We also need a fund that we have immediate access to in case of an emergency but owning sufficient life insurance coverage certainly frees up some of the cash that would need to be saved for important needs after death.
Regardless of the type of policy you choose to buy, term or whole life, you are taking care of these things at a cost of just a few cents on the dollar. The least costly way to go is term insurance. There are several types of term life insurance policies. The most popular are the level term policies...5 year term, 10 year term, 15 year term, 20 year term, 25 year term and 30 year term. There are also variations of whole life...modified whole life, graded premium whole life and variable life.
Both Greath Owen & Donald Lusan are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Greath Owen has sinced written about articles on various topics from Real Estate, Bathroom Home Improvement and Home Improvement. About Author:Greath Owen writes about . To know more about. Greath Owen's top article generates over 110000 views. to your Favourites.
Donald Lusan has sinced written about articles on various topics from Finances, insurance agents and Finances. For more than 40 years Donald has been known for his extensive knowledge of the life insurance business. He has represented some of the largest and most admired life insurance companies in the United States as well as Canada. His advice is invaluable. Don. Donald Lusan's top article generates over 40500 views. to your Favourites.