A Brief Definition of Life Insurance
There are a lot of things to consider before you even get your own life insurance policy. The most common of them is the fact that you are doubtful on the importance and significance of having a life insurance. But for individuals who think about their financial future in case of death of any family member, they consider getting a life insurance.
Aside from the fact that life insurances offer protectional needs, it also gives opportunity for a tax-free investment, built-in cash value and reaping dividends. Purchasing it with discretion can lead a policyholder to utilize it as liquid cash which he can use whenever he needs it.
There are a lot of different types of life insurance that can cater to the different needs of various individuals. 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. The term insurance policy can only cater to those individuals who died between the specified periods of time of the policy they have enrolled. if he still lives after the specified term, you won’t be able to avail any money at all.
Getting a short-term life insurance is cheaper compared to a whole life insurance and this is common to young individuals who have dependents and those who have a house or car loan. 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. At the beginning, premium cost for level term is very high compared to renewable term but after a few years, it becomes lower.
But if you are looking for life protection and ingrained cash value features, you should get a whole life insurance. The initial steep premiums of this type of insurance may exceed the insurance’s actual cost. The surplus you get from it or the cash value is added to a separate account that you may use for a tax-free investment to reap dividends or it can also give a level premium on the latter part. 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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