Life insurance is one of the most important aspects of personal finance, and if someone relies on you in any way, it is absolutely essential that you have it. Even though many people do, especially those with families, there is a lot of confusion surrounding it.
There is no doubt that life insurance and the various policies that are offered can be pretty confusing, but gaining an understanding of them might help you to make the right decision for you and the people you love.
Check out there three things you absolutely need to know about life insurance:
1. Your life insurance company doesn’t just assign a “value” to your life — it is meant to help compensate for the financial consequences of death. It helps cover left behind expenses, like outstanding debts, mortgages, educational expenses, and loss of income. This comes at a crucial time, when the loss of a beloved member of the family might make it hard for those left behind to makes ends meet. It also has a bonus of giving family members a peace of mind, so that they can deal with their grief in their own ways.
2. There are four different roles to be filled in a life insurance policy. Those are: the insurer, the owner, the insured, and the beneficiary. The insurer is the company from which a policy is bought, the owner is the person responsible for premium payments, the insured is the person whose life the policy is based upon, and the beneficiary is the person who may receive the death benefit in the event that the insured passes away.
3. There are two overarching categories that life insurance fits into. Term life is the least expensive and the most ubiquitous. With this type of policy, the insurance company bases the premium of the probability that the insured will die during a specific time. Permanent life insurance also includes a probability of death calculations but includes a saving mechanics known as cash value, which is designed to help the policy last forever.
Your life insurance plan could make a huge difference to your family if you pass away — don’t wait to take one out today. Call a life insurance company to take out a plan.
