If you die, life Insurance Policy is designed to provide financially for those you have left behind and have listed as your beneficiaries. In buying life Insurance you, the insured, enter into a legal contract with the Insurance company, also known as the insurer. Basically, the contract states that if you make your monthly Insurance payments in a timely manner, your family or other beneficiaries will receive a specific amount of money when you pass on.
Although some may find the idea of life Insurance distasteful, it is considered to be essential in protecting the fiscal health of your spouse and children should they find themselves fiscally taxed due to your death.
Types of Life Insurance Policy
There are two primary types of Insurance Policy: permanent life and term life Insurance Policy. Each provides specific types of protection for your loved ones.
Term life Insurance, the simplest form of life Insurance Policy, is designed to protect your family for a specified length of time or “term.” Term policies, which range from 1 to thirty years, provide a one-time death benefit but no cash savings. This means term policies only provide benefits as long as the insured has paid the premium, which is the was of the Insurance. Premiums are divided into equal monthly payments that are assessed for the entire period of coverage. If you bought a policy that covered you for a three-year term, then you would make 36 equal premium payments on that policy.
Permanent Insurance is designed to offer both a death benefit and an investment return after a length of time. Because this type of Insurance Policy offers a long-term savings plan, premiums are higher than those for term life Insurance. Common types of permanent Insurance Policy are whole life, universal life, and variable universal life.
