Planning life with Life Insurance

Planning life with Life Insurance             

Life is a journey that no one is ever sure of where you are heading. It is therefore to get planned in every step that we take. Life insurance therefore is designed to restore life back. It is the contract between the insured who is the life insurance policy holder and the insurer.

The insured is to pay some premium to the insurer in regular basis or in lump sum till their death after which they are compensated. It aids you provide for the needs of the ones we love in the years ahead when you will not be there for them. Generally, Life insurance is available in two types i.e. term life insurance and whole life insurance. 

Term insurance represents that form of insurance where the insured is to pay premiums in lump sum amount to be provided with benefit in case of an occurrence of a specific event. Whole Life insurance represents that form of insurance where the insured pays premium with only one objective of contributing towards the growing capital that is to benefit their beneficiaries in case of death. Whole life insurance policy has its benefits which include, guaranteed cash benefits, predictable premiums and expenses that do not reduce based on the cash value of the policy. 

With life insurance, you can maintain the current living standards of your dependents, pay debts and expenses and estate taxes, pay off you college education, pay or create some funds for those family members with special needs and above all protect the future dreams of the family members. 

Upon the death of the insured, the insurer must proof the death before paying out compensation to the beneficiaries named in the policy. The compensation of the policy is done either in annuities or in lump sum. You can choose the type of policy that suits your life needs. 

More on Life Insurance 

Life insurance is a milestone in safeguarding your dependent’s future if anything were to happen. Financial hardship is one common problem that is experienced by most people who are left behind after someone who is being depended upon dies. Life insurance therefore combined with income protection acts as a perfect safety net towards the financial stress especially if they were relying on your ongoing income to meet their needs and goals.

There are other types of life insurance such as Universal Life Insurance. This is designed to offer coverage that goes for lifetime of an individual. Universal Life Insurance policies are highly flexible compared to whole life insurance policies. However, due to the extensive coverage that it offers. Universal insurance has got tax savings that can aid in accumulating wealth over time. Universal life is commonly used in the estate planning strategy in order to safeguard wealth that will be transferred to the beneficiaries. Moreover, it is also used in replacing a long term income stream in case anything happens.

Life insurance has a lot for anyone to plan on the kind of life that they want their loved ones to live in future. It is a long term strategy that starts today. Choose on the type of life insurance policy to take today and safeguard the financial states of your beloved when you will not be there.

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What is life insurance?

What is life insurance?

Everyone knows that there are different stages in life.

At one point an individual will have loved ones who will always depend on him for survival. An employed man works for the survival of his wife and children. A business man will work hard to expand his business so as to maximize his profits and ensure that his family lives a happy life. Life happens by chance. No one knows for how long he/she will live. In fact everyone knows that at a certain point in life he/she will die. Death is inevitable. It happens to break the bond between people and their loved ones. Many people do not have plans on how their loved ones will survive if they die. This means that their loved ones will have to struggle so much for survival. It’s important for people to have a life plan for the future of their dependents. Life insurance is the solution. A life insurance policy can be defined as a voluntary and legally binding agreement between an insured person and the insurance company where the insurance company promises to pay an assigned beneficiary a given amount of money as an exchange for the premiums paid, in case the insured person dies.

Types of Life Insurance Policies

Different insurance companies offer different life insurance policies. Below are the various types of life insurance policies.

1. Term insurance.

In this type of insurance, the insured and the insurer agree on a specific period of time to be covered. If the insured dies within that period, the insurance company will pay out the sum assured to the beneficiary. If the insured person dies at a time beyond the agreed period, the insurance company will not pay the sum assured. Some term insurance policies are renewable in case the period expires before the insured dies. Term assurance does not have an investment component in it. The amount of premiums paid for renewable term insurance policies vary with age. Young people will pay relatively lower premiums than old people. 

2. Whole life insurance policies.

This type of insurance policies includes the investment component. The insurance company will use part of the premium to pay a fixed amount of money to the beneficiary if the insured dies. Some of the premiums paid will be invested and the insured will be entitled to investment returns which will be paid within agreed time intervals. This type of insurance policy also allows the insured to borrow part of the premiums paid and return without being taxed. Whole life insurance policies can be classified into universal life policy, variable life policy and variable-universal life policy. The universal life policy combines the term insurance with the money market investment. In most cases a market rate of return is paid to the insured from the money market investment. Variable life policies and variable universal life policies are whole life policies that have investment funds that are tied to a stock market form of investment.

Life insurance is a long term benefit and therefore requires patience and determination.

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