Life insurance companies are often regarded as organizations which make money out of the business of death. The significance of life insurance in the lives of innumerable people however cannot be understated. It can be a lifesaver for dependents and loved ones of a policy buyer. Death offers no second chance but life insurance can help to provide financial security to the survivors.
Most individuals buy life insurance policies to secure the future of their
dependents in case of their demise, whether premature, accidental, or due to
sickness. Life insurance offers a certain guarantee of financial security for
the dependents in the event of the policy buyer's demise.
The dependents of the policyholders are given this sum if the premiums have
been given in time. However, in modern times life insurance can be used as an
investment option, as a security for loans and for other requirements as well.
A life insurance policy purchased discreetly with due caution can be modulated
to attend to the various needs of a policyholder.
Life insurance has become significant in a world where social security
benefits, pension plans, and family savings become inadequate to answer the
financial requirement of the entire family, cover health costs or to retain a
certain life style, in case of the demise of the breadwinner.
There are various insurance plans that offer policies to sick individuals
who are unable to get insurance anywhere else, although the premiums are high.
Insurance companies generally hesitate to insure individuals with high
mortality risks. Smokers, diabetics or obese individuals are often insured with
double or triple the premiums paid by non-smokers or non-diabetics.
The major kinds of insurance policies are term life insurance and permanent
life insurance. There are various variations within these. A term life
insurance policy provides death insurance for a specified duration. The initial
premiums are very low but get more expensive with each passing year, and in the
long run they come to be more expensive. These are generally suitable for young
people with short-term requirements like a house loan, a car loan, or
educational funding.
The beneficiary amount is given only in case of death of the policyholder
in that specified period. The renewal of term policies or conversion to
permanent is more expensive.
There are no dividends or cash values gained through this policy, which is
purely protection-oriented. Whole life insurance provides security. Initial
premiums are substantially higher than the actual price of the insurance, but
the premium is later on much lower than for term life insurance. The initial
high premiums are used to level out the premium later, and applied to cover the
entire life.
Whole life insurance offers dividends and cash values on maturity. Endowment
insurance is a variation of term insurance that can be used for purpose of
saving, or getting additional income during retirement. Universal life
insurance is an offshoot of whole life insurance where the buyer has the
flexibility to choose the kind of premium.
Variable life insurance is popular because the premium money is invested in
various funds so that it has a potential to reap dividends. Variable universal
life insurance accommodates the advantages of both the universal and variable
life insurance. Single-purchase life insurance enables an individual to buy the
policy at once. Survivorship life insurance is done jointly by two individuals.
There are various kinds of other insurance plans with numerous variations
offered by different companies. Apart from consulting experts in securing the
best policy suiting your individual needs, one should weigh the options,
consider the kind of coverage required or insurance needed, the ability to pay
premiums, and the duration of the requirement.
Article Source: https://EzineArticles.com/expert/Ken_Marlborough/44832
