The idea or thought of your own death is one that can send shivers down your spine. It is something that you’re definitely sure will happen at some point, but thinking about it can be overwhelming. It’s such a scary thought that we’d rather just forget about it; that’s what choosing a life insurance policy allows us to do.
Unlike the fear of the unknown, thinking about taking out a life policy is a healthy thought. It shows that you’re thinking of more than just yourself when the time of your death comes. It ensures that, if you’re the primary earner of your house, your household won’t suffer financially when you die.
If you are interested in getting a life insurance policy, continue reading below. In this article, we will discuss the reasons you may want to have a policy. We will also talk about the benefits and drawbacks of life insurance.
Reasons To Take Out A Life Insurance Policy
The main reason to get a life insurance policy is to secure your household financially when you die. However, there are also other reasons why these policies are appealing.
Not only debts but your life policy will also take care of your burial expenses as well. This is so that your family doesn’t feel pressured while mourning. Your family will also not have to assume your debts when you’re dead.
Pay For Lifestyle
Your family doesn’t have to change the lifestyle they are accustomed to because of your death. With life insurance, they can still enjoy it. Also, your kid’s college will be taken care of as well as your mortgage.
If you took out coverage with investment options, your family’s wealth will grow without giving them any pressure to invest.
Pay For Taxes
Your family won’t inherit your estate taxes when you’re gone. With life insurance, that will be taken care of.
What Does A Policy Cover?
So, the main question as a beginner, you should be asking is what is a life insurance policy covers. In simple terms, it’s an agreement between you and the insurance company that a person of your choosing will be paid premiums when you die.
What Types Of Policies Are Offered
When it comes to policies, you have options depending on how much you are willing to spend. However, there are only two offers for coverage and those are term life coverage and permanent coverage.
Term life offers you a purchase package for a specific period of time. The term can vary, but most issuers offer it at a term of 10 to 30 years. This is the cheapest of the policies as it has no real cash value and it also has an expiry date unless you agree on a convertible coverage. The expiry date is at the end of the 10 to 30 years.
The second type of coverage, which is permanent coverage, is divided into two sections. This coverage is available for as long as you continue paying for it.
Whole Life Insurance
First of all, this coverage has a set premium for as long as you continue paying for it. By set, it means there are some limitations as to what it covers. Those limitations can be agreed upon with your insurer.
Universal Life Insurance
When it comes to universal coverage, it can be adjusted as per your discretion. It offers cash value, investment options to grow your wealth, and you can also borrow against it.
Like every other thing in life, there are disadvantages that come along with all the advantages.
First of all, there’s a medical exam which is carried out before any agreement. Secondly, if you don’t pay your premiums, the coverage is lost and you have to start again. That means if you are aged and have medical issues, the coverage won’t be the same as when you took it out the first time. With a term life insurance policy, when the term period is up, your beneficiaries won’t be paid.
A life insurance policy ensures that your family is well taken care of in the event of your demise. It ensures that they won’t suffer just because you’re gone and also won’t have to change their lifestyle. But you have to pick out the right coverage at the right time and be consistent with your payments for the policy to be effective.