Life insurance can help to replace your income if you pass away. Your beneficiaries can then use this money to help cover essential expenses, such as paying a mortgage or college tuition for your children. It can also be used to pay off debt, such as credit card bills or an outstanding car loan. In this article, we will discuss what life insurance is, how it works, and the different types of life insurance you get. Let us have a look.
What Exactly is Life Insurance?
Here is a simple explanation. Life insurance is a contract between you and an insurance company. Essentially, in exchange for your premium payments, the insurance company will pay a lump sum known as a death benefit to your beneficiaries after your death.
Your beneficiaries can use the money for any purpose they choose. Often this includes paying everyday bills, paying a mortgage, or putting the children through college or school. Having the safety net of life insurance can ensure that your family can stay in their home and pay for the things that you planned for. When you want to get life cover to consider the following.
- How much coverage do you need?
- Whether a term life or permanent life policy makes more sense
- What you’ll pay for premiums
- The differences between life insurance quotes for each potential policy
The Uses for Life Insurance
Now that we know what life Insurance is, let us look at what we can use it for and the benefits of having life insurance. Life insurance can be an important part of your financial strategy. That’s because a life insurance policy can help you ensure that your loved ones have a secure financial future after you pass away.
Not only can life insurance help cover your final expenses but it can also provide your family with a financial safety net by helping to replace your income or serving as an inheritance for a loved one. There are a couple of ways life insurance can be used for:
- Inheritance: You can get life insurance with the intention to leaving it to your loved ones as an inheritance. Just make sure to name your chosen heir as the beneficiary on your policy.
- Replacing income and paying off debts: This is one of the biggest benefits and reasons people get life cover. Your loved ones can use the money to pay off debts or loans or any other expenses that need to be paid off.
- Contributing to charity. You can also decide to have your favourite charity as your beneficiary. So, if you pass away your charity of choice will financially benefit.
The Different Types of Life Insurance
There are two main types of life insurance. Term Life Insurance and Whole Life Insurance.
- Term life insurance policy: This is a policy that provides insurance for a specific period of time and it will give your loved ones a pay-out if you pass away during this term. If you do not need the life insurance during the time period it will simply expire.
- Whole Life Insurance: This is a very simple form of permanent life insurance and it lasts your entire life. Your premiums stay the same forever, it has cash value and your death benefit is guaranteed.
If you are looking for life insurance there are a couple of companies that will provide you with life insurance. You will definitely find life cover that will fit your needs and wallet! Some of the life insurance that are available: Discovery Life Insurance, Liberty Life Insurance, and All Life insurance. You can visit these online and get more information and assistance about the best life insurance option for you and your loved ones.
Factors That Affect Your Life Cover Premium
There are a couple of things that will have an effect on your premium. Your health is very important with regards to life cover. If you are unhealthy and do not care about your physical wellbeing those premiums will skyrocket each month. So, if you are a heavy smoker and drinker and not really a fan of salads and exercise you are at risk of having an early death or illness. You will be seen as a risk and pay more each month. If you suffer from diabetes, asthma, and other chronic illnesses, your life expectancy is reduced, driving up your risk. Just as your physical well-being is taken into account, so is your mental health.
If you’ve got a safe desk job, your career is probably not going to affect your insurance premium, but if you engage in an occupation that involves danger, you can expect to pay a little more. These include jobs like firefighters and even occupations where you spend a lot of time driving because statistically, you’re more likely to be involved in an accident. (Truck drivers) Your premiums are also likely to be higher the older you get, as you are considered to be a greater risk as you age.
Who Needs Life Insurance?
Let us have a look at some of the people who would really benefit from having life cover.
- Parents with minor children. Life insurance can make sure the kids will have the financial resources they need until they can support themselves.
- Parents with special-needs adult children. For children who require lifelong care and never be able to look after themselves, life insurance can make sure their needs will be met after their parents pass away.
- Adults who own property together. This can be a good idea if partners own property together. If one partner passes away life insurance can help the other one to maintain and still finance the property.
There is a lot to consider when getting life cover but at the end of the day the most important thing is that your loved ones are taken well care of when you are no longer there. And that is the most important thing and the reason why there is life insurance. To make it easier for loved ones even if you are not there anymore.