What is Life insurance?
Life insurance is a contract that is executed between an insured and an insurance company; Where the insurance company guarantees that in case of death of the insured, a certain amount of money will be paid to the heir of the insured.
Under the terms of the contract, the insured gets paid even if he is sometimes seriously ill. The insured usually pays a certain amount to the insurance authority at one time or over some time.
A life insurance policy is a type of agreement with an insurance company. Premium payment In return, the insurance company makes a one-time payment known as ‘Death Benefit.’ The insured person can bear this payment after the death of his family.
- It’s will protect you and your family from future risks. And it will provide for your family’s future expenses after your retirement or death. In that case, is a long-term investment.
- The amount of insurance paid will depend on the insurance category you purchase. Moreover, you can decide how will spent the money or whether it will apply it to a specific case (mortgage, rent).
- The amount of money you have to pay for life insurance depends on several factors. Such as how much money you want to keep for the family or how long the policy lasts. It even depends on your age, health, and lifestyle.
Let’s not know about the two common types of life insurance;
Term life insurance (term life) insurance);
This type of insurance is for a fixed period like 5, 10, or 25 years. This insurance is less expensive than permanent life insurance. This insurance can be used as an alternative to your lost potential income. And it will help you meet your family’s financial goals, such as paying off mortgages, running a business, and paying for education.
Keep in mind, however, that although this insurance is referred to as a potential income option, it only pays a one-time fee. The advantage of term life insurance is that once your family is financially self-sufficient, you do not have to spend money on insurance.
Whole life insurance;
Life insurance is a type of permanent life insurance. There is no fixed term of this insurance. It’s more expensive than term insurance. Here the insured has to pay the life insurance premium. After the death of the insured person, his family will enjoy a certain amount of money mentioned in the insurance policy.
The benefit to the insured is the gain of “peace of mind”;
Because he knows that his heirs will not have financial problems after death. This method is also used to gain financial benefits after retirement if the insured accepts the insurance carefully and specifies so in the terms. It’s a legal contract, and the scope of insurance limits the terms of the agreement.
Particular words are written here, and the liability rests with the insured; For example, in case of death due to suicide, war, etc., no payment is made by the insurance authority to the heir of the insured. Life-based contracts are divided into two main sections:
- Security policy.
- Investment policy.
Some of life insurance’s policy;
- Payable / Paid Policy:
If any policy has been in force for two years or more, it is payable on application.
- Surrender Services:
An insurer can surrender the policy even before the expiration date due to immediate financial need. If the insurer submits his approach, the installment must be paid for at least two years or more.
- Loan Benefit:
In case of immediate financial need of an insurer, 90% of the surrender value can be sanctioned after two years of a policy and is repayable in easy installments.
So now think, what insurance, what amount to do for your family’s future financial security.