By Lois Kellam
What is Life Insurance? It is a way of protecting your next of kin against financial hardship upon your death. Although the insured person never benefits from taking out the coverage, it gives them peace of mind. It stops the worry that should they die the remaining family will have enough money to cover expensive funeral costs and other expenses that they might have left. The death of someone whose income pays for the mortgage and other household bills would have a huge impact financially as well as emotionally. Life insurance is generally taken out by the insured person and a monthly or yearly premium is paid for the rest of their life. Upon their death the beneficiary will receive a lump sum of money plus any bonuses that have built up. Before the insurance company pays out, they will need to see the death certificate as proof of death.
Universal life insurance is a type of permanent policy that allows the policy holder to build cash value. It differs from term policy in many ways. For one, it can build cash value that the policy holder can borrow, withdraw, or save. Another way it differs from term life insurance is by its length. While term insurance may last 30 years or so, most universal policies last as long as the policy holder pays the premium.There are several different forms of universal policy available.
Of the many different types of life insurance available to consumers, term policy is generally regarded as the most inexpensive. In general, it pays a monetary benefit to the named beneficiary upon the death of the covered person. Popular types of insurance include: whole life, variable life, and term life. While part of the premium in a whole life or variable life policy goes into an investment fund, no part of the premium in a term life policy is used for investment purposes. In short, the premiums in a term policy pay for the insurance.
Whole life is a policy that covers the entire life of the insured person, as long as the premiums are paid. The policy expires when the covered person dies. With this type of policy, money from your premium is applied to primarily two areas: the insurance portion and the investment portion of the policy that consists of stocks, bonds and mutual funds.
Although there are different types of life insurance, there are virtually two basic types; "Whole life insurance" and "Term insurance". As it implies, "Whole life" is a protection for your family and business until the end of your life term and provides a foundation for any other financial planning. Regarding "Term" life insurance, this will be particularly beneficial, if you experience times in your life where finances is scarce and you are uncertain whether you want a permanent insurance. Term insurance will give you affordable protection, for a specified time, with death benefit to a beneficiary.
Life insurance is essential in order to protect your loved ones. Aside from protection, it can also offer an investment vehicle as a form of saving up for your family. It's never too early or too late for anyone to acquire a life insurance. As you reap the benefits, you will see that it will be worth every dime you have invested.
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