Understanding Life Insurance in the Simplest Form
Having a life insurance policy is not that easy because you need to consider different aspects first. One of which is the fact that you are uncertain to have one when you think about its significance and the need for it. But there are people who get a life insurance because they think about the future of their financial status once any member of the family dies.
Aside from giving protection to you, life insurances also offer a opportunity to have a reaping dividend, built-in cash value and a tax-free investment. If you purchased it with due discretion, you can utilize it as a liquid cash to help you with your different needs.
Depending on the type of need, there are various types of policies that is customized to fit each these needs. You can also consider asking for an advice from a financial expert so that you may know what policy you really need by also considering the number of dependents you have.
You can choose between the two basic forms of insurances and these are the whole life insurances and term life insurances. There are two different terms for a term life insurance policy and these are the short-term or temporary life insurance. This type of insurance can only protect and give death benefits to individuals who were insured during a specified period of the policy they got. if he still lives after the specified term, you won’t be able to avail any money at all.
Those availing short-term policies are those individuals that are young and already have dependents or a house or car loan and they prefer this because it is much cheaper than having a whole life insurance. During the initial years, the premium you pay is low but as the insured’s mortality risk increases as he age, the premium cost also increases making the premium almost equal to that of a whole life insurance.
You can choose between two types of term insurance and they are the level term or the decreasing premium and the renewable term that has a increasing premium. The premium for a level term is high for the first years compared to that of a renewable term but it decreases in the later years.
But if you are looking for life protection and ingrained cash value features, you should get a whole life insurance. The actual cost of the insurance may be overlapped by the initial steep premium of this whole life insurance. You can use the surplus or the cash value to add in your separate account that you can use to give a level premium on the later part or use it for a tax-free investment. You are also guaranteed that you get the death benefit on the maturity or upon death of the insured aside from the cash value you have.
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