Life Insurance Policies : A Simple Guide

Life insurance policies are designed to support and protect people after the death of a loved one. They provide a practical way to ensure the well-being of one’s family when it comes to financial matter long after the death of the main bread earner in the family.

By providing a steady stream of income, these policies enable family’s to meet their immediate and long term needs and lead the same quality of life they are accustomed and enables them to get back on their feet.

From covering the expenses of unpaid medical bills to covering funeral costs, such policies ensure that the people who were dependant on the deceased don’t have to bear any extra burden.

Similarly, life insurance can be used to ensure that the medical costs for elderly parents or handicapped children are taken care off in the case when a person is no longer alive to fulfill these duties.

It is imperative to understand that life insurance policies are not designed to benefit the purchasers themselves, but instead are meant to provide support and protection to their immediate families and dependant individuals in the case of their unforeseen death.

Therefore, people who want to make sure that their families don’t go through any financial hardships after their untimely demise should opt for a life insurance policy while they are fit and healthy.

It should be noted that life insurance premiums increase exponentially when the client is suffering from any health problems. It is imperative to understand the various kinds of insurance policies and their nuance in order to choose one which best meets a person’s requirements. The three major kinds of policies are given below

Term life insurance

Term life insurance provides coverage for a specific time, and has to be renewed after the expiration of the policy.

Two subcategories of this policy are:

Level term: The coverage remains constant during the entire period of the policy.

Decreasing term: The coverage decreases as the coverage period comes close to its expiration

Whole life insurance

Whole life insurance policies are valid for the entirety of its purchaser’s lifetime. However, these policies require a premium to be paid on a yearly basis into the existing policy. Funds can be borrowed from such a policy with the downfall being that borrowing funds reduces the benefits received after death.

Once you educate yourself a bit about different insurance products, it becomes easier for you to make a right choice. However, it is worth mentioning that you should be ready to compare a few term or whole life insurance quotes before finalizing your decision. Moreover, you should pick an insurance provider with extreme care.

Although it’s tempting to base your decision on price, cheaper insurance products may never offer appropriate coverage. So, know your needs and have an idea of how much will be enough for your family to manage different expenses when you’re not there to take care of everything.

Universal life insurance

This life policy combines the best aspects of both the other policy types, providing a flexible payment plan in addition to providing coverage for the whole life of its purchaser.