A Brief Definition of Life Insurance
Getting a life insurance policy is not a very simple decision to make and it takes a lot of thinking first. One of which is the fact that you are uncertain to have one when you think about its significance and the need for it. But for individuals who think about their financial future in case of death of any family member, they consider getting a life insurance.
Aside from the fact that life insurances offer protectional needs, it also gives opportunity for a tax-free investment, built-in cash value and reaping dividends. If you purchased it with due discretion, you can utilize it as a liquid cash to help you with your different needs.
There are different types of life insurances that can cater the different needs of various people. Also, consulting a financial expert can help you identify what policy you will have to get by considering also the number of dependents you have.
Life insurances have two basic forms and these are the whole life insurances and the long term insurances. Other terms for a term life insurance policy are temporary or short-term life insurances. This can only serve and give benefits to those individuals whose death belong to the period of the validity of the policy they got. But when the person insured gets to live beyond the time specified in the term insurance policy, he will not get any money at all.
Those availing short-term policies are those individuals that are young and already have dependents or a house or car loan and they prefer this because it is much cheaper than having a whole life insurance. But the premium costs for this type of insurance gradually increases once the insured age since there is higher mortality risk when he grows old making the premium almost equal to that a whole life insurance.
There are two kinds of term insurance and these are the renewable term that has increasing premium and the level term that has a decreasing premium. The premium for a level term is high for the first years compared to that of a renewable term but it decreases in the later years.
A whole life insurance on the other hand has an ingrained cash value and guarantees life protection. The actual cost of the insurance may be overlapped by the initial steep premium of this whole life insurance. The surplus or cash value you will get from this can be utilized as a tax-free investment when transferred to a separate account or be used to help give you a level premium late on. Aside from this cash value, death benefit can be gained on the maturity of this policy or upon death of the insured person.
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