Do you really care about your loved ones? I mean who doesn’t? But loving them is not enough. Health issues don’t come knocking at your doors, they just happen. In such situations, money plays a major role.
What if you are not backed up with enough money to get your loved ones treated in difficult phases? Simple, it will make the situation even worse or just make a hole in your pocket.
What if I say you can avoid such a situation? This is where life insurance comes in.
Look at it as a financial instrument that not only offers protection but also secures finances.
Getting a life insurance policy could be a responsible decision you could ever take. Besides this, choosing the right type can be overwhelming.
Worry not! I am here to ease things for you. Carry on reading to learn about its types, benefits, and things to consider when picking life insurance. Also learn about What Is Life Insurance by reading this article.
At its core, life insurance is a legally binding contractual agreement between the person who is getting it and a life insurance company. This assists with managing finances by making a safe place to save money in case something bad happens.
When a person decides to get one, they are supposed to pay a sum of money or a certain premium at fixed intervals. Conversely, the insurance company in return pays the beneficiaries the insured amount for unwanted events like death/disability.
Listed below are the types of life insurance you can consider reading about prior to making an informed decision:
It is exactly what the name implies, meaning, it is designed to last a certain number of years. Term life insurance is one of the most popular forms.
The reason behind its popularity is the high financial protection that comes in the form of a sum assured at an affordable premium. Common terms for it include 10, 20, or 30 years.
Quick Tip 💡:
The best term life insurance policies are something that balances affordability with long-term financial strength.
Again, as the name says, a whole life insurance plan provides cover for your whole life i.e. up to the age of 99 or 100 years. What makes it unique is that it has both survival benefits and death benefits.
Like other permanent policies, it even accumulates cash value over time.
Some of its features include the family being provided with a death benefit upon the insured’s death, the level premium remaining the same for life, and also paying out a survival benefit.
Universal life insurance can be seen as a permanent coverage alternative. This plan has elements like cash value and offers lifetime coverage as long as you pay your premiums.
Compared to whole life insurance, premiums are flexible with a universal plan. This makes it a perfect policy that adjusts to your life circumstances.
A variable plan is yet another permanent life insurance policy that comes with an investment component. It has a cash-value account with money that is invested.
Being a permanent plan, it also pays a death benefit to beneficiaries when they die.
In addition to it, individuals can allocate part of their premiums to a fixed account.
Indexed universal life (IUL) insurance is often pitched as a cash-value insurance policy. This type of insurance policy benefits from the market’s gains tax-free, that too without the risk of loss during a market downturn.
The policyholder can figure out exactly how much cash value to add to an equity-indexed account and a fixed-rate account if they’re available.
The most common benefit that life insurance has to offer is it helps in creating a safe financial nest for your family. The rest of them are as follows:
Before getting into how to choose the right life insurance policy, remember one thing, the idea of the right policy differs from person to person. So, it is beneficial to choose the policy that suits you the best.
Now, here is how you can decide on one:
In conclusion, life insurance can be a great component of comprehensive financial planning. After all, it helps provide a level of certainty which is why it is considered to be the most important financial tool.
Now that you know the basics, it’s time to take things over and decide exactly what kind of life insurance is right for you.
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