WHAT IS LIFE INSURANCE AND BENEFITS

Lіfе insurance, аlѕо known аѕ lіfе соvеr оr life аѕѕurаnсе іѕ a way tо hеlр protect your lоvеd оnеѕ fіnаnсіаllу іf you were tо dіе durіng the lеngth of your роlісу.

Please rеmеmbеr thаt life іnѕurаnсе іѕ not a ѕаvіngѕ оr investment рrоduсt and has nо саѕh value unlеѕѕ a vаlіd сlаіm іѕ mаdе.

How Does Life Insurance Work?

Yоu сhооѕе thе аmоunt of соvеr уоu nееd аnd how lоng уоu nееd it fоr and you саn рау уоur рrеmіumѕ mоnthlу оr аnnuаllу. In rеturn, уоur fаmіlу has thе rеаѕѕurаnсе оf knоwіng thаt іf уоu died whіlе соvеrеd bу thе роlісу thеу could rесеіvе a саѕh sum рау оut іf a vаlіd claim іѕ made.

Thеу соuld use this tо help with hоuѕеhоld bіllѕ, сhіld-саrе costs оr соvеrіng mortgage рауmеntѕ.

How Does Life Insurance Work?
So, how does life insurance work? Is it complicated? Is it possible for you to understand it?

No, it doesn’t have to be complicated. And yes, you can understand it.

In its simplest form, the concept of insurance—whether its life insurance, automobile insurance, or any other form of insurance—is that you pay an insurance company a known amount of money and in exchange, the company agrees to take over an unknown risk you have.



Types of Life Insurance
When it all boils down, there are basically two different types of life insurance options based on the duration of the policy—one that is in force for a predetermined term and one that lasts through your entire life. These two types of life insurance are commonly known as term life insurance and permanent insurance.

1. Term Life Insurance
Term life insurance provides coverage for a specific amount of time (think presidential term or term of service). If you or your spouse pass away at any time during this term, your beneficiaries will receive the death benefit from the policy.

Term life insurance plans are much more affordable than permanent life insurance plans. That’s because the term life policy is only focused on providing the death benefit—no other bells and whistles, such as cash value investments, are added to bloat your premiums.

Of course, the hope here is that you’ll never have to use your term life insurance policy at all, but if something does happen, at least you know your family will be taken care of.

2. Permanent Life Insurance
As you can imagine, permanent life insurance is called “permanent” because it lasts throughout your entire lifetime. Other variations you may find are universal, variable or whole life insurance—each with its own distinctions.

You might think it’s a good thing to have life insurance coverage for that long, but here’s the truth: If you practice the principles we teach, you won’t need life insurance forever. Ultimately, you’ll be self-insured. Why? Because you’ll have zero debt, a full emergency fund and a hefty amount of money in your investments. Sweet!

Besides the insuring-your-life part, permanent insurance adds an investing-your-money piece to your policy called “cash value.” The insurance company takes a chunk of your premium to start an investment account.


When Should I Buy Life Insurance?
It's never too early or too late in life to buy life insurance. The sooner you buy it, however, the less expensive it might be. Why? Your age and health history are two of the factors that determine the cost of your premium rate (the amount you pay for your policy).

What better time to purchase your first life insurance policy than when you're young and healthy?

The type of life insurance policy you may need will depend on your unique situation, including your stage of life.


How Much Does Life Insurance Cost?
The price you pay for life insurance is determined by a number of factors, including your selected policy type and coverage amount.

Some of the other factors that influence your premium include:

Health status
Age
Driving record
Lifestyle
If you're in the habit of jumping out of a perfectly good airplane, for example, your premium rate might be higher than someone who watches Netflix on the weekends.

For this reason, when you apply for life insurance, you'll likely be asked a series of questions about your medical history and lifestyle. In some instances, a medical exam may also be required.

With your newfound understanding of life insurance, you can explore the options for life insurance policies or use this information as an icebreaker at your next social gathering.

ALSO MUST READ:  HEALTH INSURANCE PLANS