What is Life Insurance ??
Life Insurance is Necessary Insurance plan for everyone and their Family. There are many insurance plans but only a few will fit for us.
Life insurance is a Legal Contract between you and the insurer . You pay a fixed amount of installment monthly based on insurance plan's coverage limit.
The limit is dependent on how much you can pay to insurer. If you buy higher price policy you also get high coverage amount from the insurer.
Life insurance Premium is bought by you and your family members , which benefit when a family member dies. It is claimed by your family members when a family member lose his life.
Before we move forward , let's understand some words meaning related to Life insurance policy :
• Policy Holder : A person Who buy the police and pay an amount to the insurer.
• Insurer : The Company that provides policy premium's Coverage to your family.
• Beneficiary : People You chose to receive tghe Coverage amount after your death.
Key Takeaways
• There are Four types of Life insurance Plans Universal life insurance , Whole life insurance , Variable universal life insurance and final expense insurance.
• Before Buying Life Insurance , understanding which life insurance you need and what is your financial condition , can help you buy a perfect plan.
• There are many plan choices like you need insurance for how long like 10-20 years , how you want involve in money management or you need with cash value.
• It will be great choice to get a financial advisor or insurance company's agent , if you are confused which life insurance is best and which one to choose.
Types of Life Insurance
There are many types of life insurance plans Term , Universal , Whole Life , Variable universal and final expense insurance.
Term Life Insurance
Term Life Insurance is bought only for a specific time period and you pay premium for a specific time period , when it expires beneficiary get the insurance benefit from insurer.
There are many Term Life Insurance types you can choose while buying a life insurance :
• Short Term : If you want to buy life insurance for a small duration like 1-2 year or , you can choose short term life insurance.
• Fixed Term : It has a fixed term and amount of insurance.Best for them who can afford premium.
• Simplified Issue Term : In it the death benefit is smaller amount than others.This plan is best for small coverage amount.
• Decreasing Term : Coverage amount and Premium keep decreasing over time.
Whole Life Insurance
Whole Life Insurance is type of permanent life insurance . It covers your whole life . Your family get coverage amount after you pass away.
Coverage amount gets increasing until you keep paying premium.Premium amount is fixed until you keep paying.As it stay as long as active you pay premium , it costs more and build up cash value.
Universal Life Insurance
Uinversal Life Insurance is also a form of permanent life insurance . It includes flexible Death benefits and premium.
You can increase or decrease premium amount according to your financial condition.You can skip premium if your cash value covers it.
Universal life insurance can be a good choice if your financial are not good or you want to change premium amount . This is most important thing in that this type of life insurance has flexibility according your conditions.
It is a good choice if you are comfortable with money that will be given to beneficiary when you pass on or if you want the skip premium sometimes so you can use the money somewhere else .
Variable Universal Life Insurance
Variable universal life insurance ( VUL ) features cash value components and flexible premium and death benefits .It also a permanent life insurance policy. It is a combination of lifelong coverage with potential for cash growth including flexibility.
VUL allows you to invest in subaccount like bonds or stocks. Your cash value increase or decrease according to market.It provides flexibility and permanent coverage.
You may required to keep the minimum required amount in account , if your balance is less than required , you may face a fee cut .
It has a issue of market drop which can get you loss of significant amount.
Some Variable insurance policies provides face value along with policy's cash value to beneficiary. The amount received by beneficiary depends when he receives the amount. For example, if a policy holder die after the market drop the beneficiary will get less amount then expected.
Final Expense Insurance
Final expense insurance covers expenses of funeral , final medical bills after a person's death.
Some Other Life Insurance Types
• Indexed Universal Life Insurance
• Supplement Life Insurance
• Survivorship Life Insurance
How to Choose best Life Insurance Plan According to your need
There are some important points you must consider and assess before you choose a life insurance plan for you and your family.
• Assess your income , expenses , loans , bills , mortgage , essential home need expenses before buying a policy.
• Evaluate your assets like what can you sell or start for funds. Investment , social security benefits , luxury assets etc. are included in it.
• Check your and your family's financial conditions and circumstances , so it can help you find best life insurance policy suitable for it.
• Decide how many years' policy you need like 1year , 5 years for suitable plan.
• Most important thing is you consider your age , present health conditions while buying a policy.
Final Thoughts
Now we have known what is Life Insurance , How it works , its types and what factors we should consider .
Life insurance is a must buy policy for your family's future financial aid.There ate several important points to be considered. If you don't know which life insurance plan is best for you , you must consider a financial advisor who will help you to get the right policy for you.
