Life insurance is a touchy subject. It’s not something you think about until there is an emergency or tragedy, and then it’s too late to do anything about it. Some people don’t even know what life insurance is, but they should. This article will explain some of the basics of life insurance so you can make sure your family won’t be left without any protection in case something happens to you.
What is Life Insurance?
Think of life insurance as an investment. You are paying an insurance company right now for the chance to get money later in case your family needs it. People used to insure themselves against death all the time without even thinking about it by putting their savings into a widow’s fund.
This is basically what you do when you buy life insurance. You deposit money into the insurance company so that if you pass, they will give your family the agreed sum of compensation. Therefore, your family can pay all the bills and maintain their standards of living.
Are There Different Life Insurance Plans?
There are several good plans for life insurance, but the only one that will do you any good is a permanent plan. The temporary ones are not as helpful because they only cover particular circumstances. These include:
- Term life insurance
- Whole life insurance
- Universal life insurance
- Variable life insurance
- Simplified life insurance
There is a need to compare the different plans before deciding which one to pick. The good thing is that there are online platforms ready to help you with this. They allow you to compare life insurance options.
How Do You Get a Life Insurance Policy?
Getting a life insurance policy is straightforward. All you have to do is choose the plan that works for you, fill out some basic information and wait for your quote. However, make sure you contact several different companies because they all offer other plans. Also, make sure you ask them how much it will cost each month and if there are extra fees you have to pay after you sign the policy.
What Does Life Insurance Cover?
Life insurance covers;
- Death of the policy owner
Typically, this would be the breadwinner of the family. When signing up for a life insurance policy, the policy will nominate a beneficiary(s), that will receive the compensation upon his/her death.
Life insurance can also cover your debts. If you have an outstanding balance on credit cards, loans, etc., it could be challenging if something happens to you early and your loved ones cannot pay them off before the company comes after them for the money.
- Borrowing against cash value of your policy
By having a permanent life insurance, you can borrow against the cash value of the policy to put into your children’s college fund, securing a mortgage, or anything of that matter. This is great for people who have children or dependents because it means they will pay for their education or extra expenses.
Who Qualifies for Life Insurance Benefits?
Everyone qualifies for life insurance, no matter their age or income. However, your monthly contribution, or premiums, will usually depend on your current state of health and age. No matter your financial situation, you should find an affordable plan that will help you come up with the money to protect whoever depends on you in case something happens to you.
What are the Advantages?
When something happens to you and your family doesn’t have any money saved up, they will have to go into debt. This is a big hit on credit scores and can make it nearly impossible for them to get ahead in life.
Life insurance is an investment that pays off in the long run. It’s a good option for people who have children or dependents because it means they will be able to pay for their education or extra expenses if anything happens to you early.
As your family grieves in your passing, leaving behind a financial safety net means they have one less major issue to worry about.