Life insurance is a policy in which an individual can protect themselves against unforeseen circumstances. In a simple life insurance can be defined as a written agreement stated in the insurance policy, which is made by the insurer to the insured, which one insurer (insurance company) will provide compensation amount of money, conformed to the agreement, if something happens or override the insured (the policyholder).
Many insurance companies give offer various types of life insurance products in accordance with the requirements, the insured is free to determine the purchase in accordance with the needs, and are obliged to pay premiums on time.
The significance of the life insurance policy
A life insurance policy is a kind of financial security for the family. This policy helps to protect your family from any unusual events such as illness, death, and other-lainl. The cost of the policy depends on the age and financial condition of the person who bought the insurance policy. Youngsters buy an insurance policy for their family as a source of income in case something happens to them. Parents buy an insurance policy to leave some money to other members of the family when they died.
Many of us buy life insurance because they want to make sure that our loved ones remain financially secure after we die. A replacement income is the main reason people buy life insurance. The first step in planning a life insurance is to do your life insurance needs analysis, which means that the financial needs of your family dependents.
Before buying a life insurance policy, consider your financial situation and standard of living you want to keep to relatives that you have incurred. You may want to ask yourself, “who will be responsible for your medical expenses, when you are sick to death”, for example. Or, “What would happen if your family had to move or change their standard of living after you die ?.” And no less important, you also need to have assumptions about sudden death, although it did not expect. This assumption is needed to determine the current needs of life insurance for the family or relatives who would like to leave.
You should also consider the financial needs of long-term for your family members, such as the cost of health care for children or wife, for example, children or your wife have a disease that requires treatment costs a great, educational expenses, debt in the bank, the cost of property tax, tax needs on business or your business, and other unexpected costs you can expect or account before you determine a life insurance policy for you.
Because life insurance needs change from time to time, then you should do periodical evaluations of your life insurance. The insurance experts recommend reviewing your life insurance policy coverage once every five years, or whenever you experience a major life event, such as changes in income or assets, marriage, divorce, birth or adoption of a child, or a large purchase like a home or business.
The types of life insurance policies and benefits
Life insurance have a variety of product types, where each type of product that has different benefits. The types of life insurance products is intended to serve various needs, abilities, and purchasing power.
1. Term Life Insurance (Term)
Term Life Insurance is a policy that is the simplest and least expensive. Polis is usually taken for a certain period, say 10 years, 20 or 30. The goal is to provide temporary needs, such as children’s education, home, mortgage payments, and others. This kind of product is suitable for those who have a need for insurance costs are large but only have limited purchasing power.
2. Life Insurance (Whole Life)
Life Insurance Life insurance is a basic type of Permanent life insurance provides protection for a person. If you want the benefits are more than just a death benefit, or you like the idea of long-term savings. If you want life insurance at the same time had some savings for emergency needs, such as the cost of hospital bills. Or, if you want to get capital growth investments, you can consider buying this insurance policy. But be prepared to pay a higher premium than Term Life Insurance.
3. Life Insurance Double (Endowment)
Double Life Insurance is a type of life insurance that provides two benefits at once. The first benefits in the form of acceptance sum insured if the insured dies within a specified time period in accordance with the policy of insurance policy purchased. Second, if the insured is still alive when the period expires, the insured will get the whole sum.
Before you buy a life insurance policy, it is recommended that you seek as much information on some of the insurance companies, then compare the protection afforded by the premium to be paid. Also to consider, how many family members you have incurred, and inventorying needs education needed for your child. Also the cost of health care or treatment if there is a family member who has or potentially infected with a disease that requires a high cost. If you have more funds, you can buy an insurance policy and health education separately.