Life insurance is a handy little tool we are offered in life that allows our loved ones to be taken care of after we inevitably pass away.
Life insurance can replace your income or pay off your remaining debts after you die which will take a lot of weight off of your loved one’s shoulders in an already difficult time. Life insurance is a signed contract between you and an insurance company in which you make regular premium payments to them.
In return for your payments, you are provided with a death benefit that your loved ones receive when you die. There are plenty of insurance brands around the world that will help you out in any way possible, however, because of the fact there are so many, it can become confusing at times. There are two types of life insurance and both have their significant place, they are term life and permanent life.
Term life is the type that covers you for a fixed amount of time, however, permanent life covers you until the end of your life. Both have their pros and cons which is why doing your research to understand them is highly important. It is then that you will be able to decide which one is best for you.
One of the biggest benefits of life insurance is knowing that even when you’re no longer here, you can protect your loved ones.
What is life insurance?
A little-known fact about life insurance is the fact that it was originally designed to benefit and protect orphans and widows. It would cover and care of burial costs that they just could not afford. However, life insurance has come a long way since then and has evolved into an effective, powerful, and highly flexible financial product.
Statistics show that over half of Americans have some form of life insurance. It can be issued as either an individual or group policy. When it comes to your loved ones, you want whatever is best for them, especially if you won’t be there.
Do I need life insurance?
All insurance was designed to solve a financial problem, and life insurance also goes along with that design. When you die, your income will no longer be around, so it is only normal to wonder what will happen to your family, especially if they are reliant on your income alone. If you have a partner, children, or anyone who is dependent on you financially, they will be left without the support they have relied on for so long.
Even if you don’t have anyone that is dependent on your income, there will still be costs associated with your passing, it doesn’t just go away. This will mean that your partner, children, or other relatives may be left with a massive charge attributed to your burial and other end-of-life expenses. When you begin to consider what charges will be associated with your passing, you will also have to think about what coverage you will need and what your beneficiaries will need.
If, on the rare occasion, nobody is financially dependent on you and your passing will not ruin their finances, you can most likely skip the life insurance. However, if your death will compromise their financial stability and become a financial burden, you should seriously look into a life insurance policy.
Which one is right for me?
As mentioned beforehand, there are two main types of life insurance, one being term life insurance, and the other being permanent life insurance. Term life insurance only covers you for a specific number of years and after that time you cease paying premiums. Your coverage will also expire at this time.
Term insurance is the easiest and most user-friendly form of life insurance, so it is also understandably cheaper. It is quite affordable for most people, so it is becoming quite a popular type of life insurance. Then, we come to permanent life insurance.
When it comes to permanent life insurance, you won’t be paying premiums for a specific amount of time, you will be paying for them your whole life. Then, when you die, your beneficiaries receive a death benefit. An investment component will also likely come along with your permanent life insurance which can also be a great game-changer.