One thing in life is inevitable and is something that will happen to all of us here on Earth, and that thing is death. Death is the one thing that all of us, rich or poor, are sure will happen in life, and it is the finite end of one’s life and journey. This is why you need to consider taking life insurance, because what will happen to your loved ones once you are dead, especially if you have a dependable partner or children. A life insurance is a safe way for you to rest assured once that you’ve passed away. It is a sure way for you to take care of your loved ones even after death. So, without further, let’s learn more about life insurance and what it entails.
What is life insurance?
It is a contract usually between a person and an insurance company where the latter, in exchange for premium payment, the insurance company then pays a lump sum which is commonly known as a death benefit. This is usually given to your beneficiaries (they are the ones whose name you put when you sign your contract) after your death. There is a common agreement between you and the insurance company in which the latter agrees to pay up a specific amount of money to your beneficiaries upon your death as long as you pay your premiums as speculated by the contract and if you are up-to-date with them. The beneficiaries can then use the money whoever they wish, and this often includes day-to-day bills, mortgages, or even putting your kids through college. This is a safety net for your family, and it can be sure that your loved ones can stay in their home and pay for things they need if they are dependent on you.
There are usually 2 types of life insurance: whole life insurance and term life insurance. The former is a policy and is a type of permanent life insurance that covers you for life as you pay your premium and are up-to-date with them. Term life insurance tends to offer a cheaper premium compared to a whole life policy. Some insurance companies provide whole life policies that offer an investment component, which allows you to build cash value, taking your premium and investing them into the market. On the other hand, a term life insurance or policy covers you for a set term, and this is usually for 20 to 30 years. The term of this specific life policy depends on your age and how much money you can pay for the premium and is a sound investment for younger people. Some insurance companies allow you to renew your coverage after the expiration date, but this will at times require you to do a medical exam.
Who needs life insurance?
For me, they are a personal tool that is good to have but buying a life insurance doesn’t make sense to everyone, and this is why people are at times wary of getting life insurance. If you are single and have no dependents and you have enough money to cover your debts, needs, and expenses, then you might not be the target demography for life insurance, and you might not need them. However, if you are the primary or sole provider of your household who is dependents or has significant debts that outweigh your assets, then life insurance can be helpful, which ensures that your loved ones are well taken care of once you pass away.
If you own a business or have cosigned debts, you might also start to consider getting life insurance as this can get help pay for the debts once you’ve died, which means that you don’t have to put this burden on someone else. You should also be aware that life insurance doesn’t cover every single situation; for example, a standard life insurance policy won’t cover you or pay up any disability benefits if you become disabled, nor will it cover any specific or non-specific long-term nursing care cost. So, do your due diligence and make sure you know what type of insurance you are signing up for, and make sure to read the fine prints in the documents before you sign them.
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