Death is a very difficult fact of life. Dealing with future finances while arranging a funeral is not an experience anyone deserves— this is when life insurance comes in.
What Is It?
Life insurance is the transfer of those risks to an insurance company through a contract stating that, even in death, your immediate family will be protected and taken care of while they figure out how to continue living a normal life after you’re gone.
Who Is It For?
If you breathe air, Life Insurance is for you. However, in order to become a policy owner, there needs to be an insurable interest. This means that the beneficiary has to be a relative or a business partner.
How It Works?
There are three people involved in an insurance policy: The insurer, the policy owner, and the beneficiary. The insurer carries all the risk to take care of the beneficiary shall the policy owner die first. The policy owner pays the insurer a monthly or annual payment for this service called a ‘premium’. This premium is calculated based on a mortality rate. Some companies do a physical exam to determine age and overall health for premium estimates.
Different Types of Coverage
There are numerous options for all kinds of budgets and circumstances. Some of these coverage options may include:
1) Whole Life or Permanent
2) Term Life
3) Universal Life
Whole Life coverage allows the policy owner to build more equity than he/she would with Term coverage.
Term Life, as its name states, is built on different time periods. The low premiums entice a lot of people, and policy owners may even be eligible to receive a convertible term policy for further coverage.
Universal Life is an entirely different program. One of the options is an Indexed Universal Life, which protects policy owners from down moves in the market. This is a hybrid option with annuity, retirement, and death benefits built into it.
When mayhem arrives, it is better to be prepared rather than finding out how difficult life is without a proper plan.