Life Insurance: a Secured Ground for You and Your Family
Why Life Insurance?
Though modern world has immense blessings, it is not risk free. Everybody is under risks. An unexpected incident might change your happy family life. Suppose, suddenly you die in a road accident. Did you think what would happen to your wife and children? The thing that will give protection and security is the life insurance. Moreover, it facilitates an income to let your family maintain its standard of living and cover everyday expenses. Furthermore, it is life insurance that will protect your home mortgage. After your death your family might not leave the house if your life insurance might pay off the mortgage.
What is Life Insurance?
Life Insurance is a contract between the policy owner and the insurer, by which the insurer agrees to pay a sum of money upon the occurrence covered by the policy and the policy owner agrees to pay a stipulated amount called a premium at regular intervals or in lump sums. The insurer also agrees to pay you on the basis of death or other event, such as terminal illness or critical illnesses.
Two basic categories of life insurance
There are two basic categories of life insurance : temporary and permanent.
Temporary life insurance, which is also known as pure assurance, provides for a specified term of years for a specified premium. The insurer is bound to pay cash benefits to the beneficiary if the policy owner dies .In addition; it only gives assurance in the event of death and nothing else. Here premium can be for one or more years. For example, annual renewable term is one type of policy where your policy is automatically renewable each year up to a specific age limit.
Another type of temporary life insurance is Mortgage insurance, which gives protection for the policy holder’s family, where mortgage will be paid if the insured dies.
Permanent life insurance is the life insurance under which the policy owner has to pay until the policy matures .It also cannot be canceled by the insurer for any reason except fraud in the application, and the cancellation must occur within a period of time defined by law.
Permanent life insurance includes whole life insurance,universal life insurance and Limited-pay insurance.
Whole Life Insurance:This policy has several advantages. The common benefits of the policy include guaranteed death benefits, guaranteed cash values, fixed and known annual premium inflexibile.Under this policy mortality and expense charges also don’t reduce the cash value shown in the policy.It covers the policyholder for his or her whole life. There is no fixed end date for the policy. When the policy holder dies, the face value of the policy, known as a death benefit, is paid to the person or persons named in the life insurance policy.
Universal life insurance: It offers many features of whole life insurance, but allows greater flexibility once the policy is in force. Like whole life insurance, universal life insurance is a permanent policy. It protects the policyholder until death—however long that may be. Also like whole life insurance, universal life insurance accrues cash value over time.
Limited-pay insurance:It is a policy, in which all the premiums are paid over a specified period after which lyhe policy owner has to pay no additional premiums to keep the policy in force. The Common limited pay periods are 10-year, 20-year, and paid-up at age 65.
So ,be wise and purchase a life insurance policy suitable to your means.
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Learn about the life insurance application process in this video with Bob Ley from the AIG insurance company. (01:09)
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