Protect Your Loved Ones. Purchase Life Insurance Now.

 

A core part of every financial planning is to purchase life insurance. It will safeguard the future of your loved ones and protect them from possible financial difficulty. The concept of a life insurance is pretty direct. When the insured party dies, the policy pays a prearranged amount to the predetermined beneficiary.

When you purchase life insurance, who are the parties involved?
Below are the parties involved in a life insurance policy.

  • The Insured  – the person on whose life the policy is based
  • The Beneficiary – the person who receives the payment
  • The Owner –  the person who is responsible of payment of premiums
  • The Insurer – the insurance company that issues the policy promising payment

Why purchase life insurance?

One reason a person may wish to purchase life insurance is to leave something substantial for his family and loved ones. If he is the sole provider of the family and then he succumbs to an unexpected death, his family is taken care of at least for a time being. This is also a perfect way to show how much you care about their future.
Here’s a quick breakdown of the basic policy types:

Term Life

This is the simplest and basically the cheapest form of life insurance. The coverage provides a fixed period of time. The period can be as short as 5 years or as long as 20 years. When the policy is renewable, the premium for the term is guaranteed for the entire duration of the term. The premium of renewals is generally guaranteed when original policy is issued. Because term policy is for a specific period of time and the payout does not increase, the overall cost of term life insurance is usually very low.

Whole life

Whole life is designated to provide you and your loved ones with coverage until your death. The whole life policy does not cover fixed periods. Whole life is sometimes referred to as “cash value” insurance because it builds cash value over your lifetime. The insurance component of the policy contains both investment and insurance.

Variable life

In a variable life policy, your premiums may be invested in a stock market. While a variable policy may offer more significant returns, it’s also at the mercy of stock market performance. If the market performance is low, the overall or entire value of the policy may decline but never below a defined level. As a result, the policy may be more expensive because you may have to pay more to keep the policy active because less money is available to cover the policy’s premium.

Universal life

This is a popular option that works like that of a whole life policy. It is a renewable. The investment component, premiums, and death benefits can be renewed and changed based upon the policy owner’s needs. The policy is very flexible and can be changed. The money can be moved between the insurance and investment components of the policy.

The purpose of a life insurance is to provide funds to satisfy in part the financial needs of the people who depend on you in case something unexpected happens. Your insurance coverage should be designed based on your age and responsibilities. If you want your dependents to have a good life even after you are gone, then the amount of the coverage should cover that lifestyle. Also consider other sources of income. What are your other assets? Do you have social security benefits, available cash and other sources of income and investments? These plus a life insurance help take care of your dependents when you are no longer able. So what are you waiting for? Purchase life insurance now and assure your loved ones' future.