Life insurance: why should I get one?
Life insurance is a binding agreement between an insurer and the policy owner, where upon the death of the policy owner, the insurer will give an agreed value of money to the policy owner’s beneficiary. To effect the said agreement, the policy owner upon his lifetime or agreed contract term, pays the insurer an agreed premium at regular period. Life insurance is based on the fact of the uncertainty of life. We are not certain as to when we will die, or if we will get serious sickness or get an accident and die. This kind of insurance basically is grounded with the uncertainty of our time. So to protect our loved ones from these sudden events, it is important to get a life insurance to assure us that we are leaving them a secure life even without our presence.
What are the types of life insurance?
There are four major types of life insurance:
1. Term life insurance – this type of insurance is, as the term implies, provides a life insurance that ends in a specified length of period and for a specified amount or premium.
2. Whole life insurance- is a permanent life insurance where it provides for guaranteed benefits upon the death of the insured, guaranteed cash values, and fixed annual premiums. However, the premium costs higher than term life insurance. Moreover, beneficiaries cannot get the cash values in the event of the death of the insured.
3. Universal life insurance- is one type which provides a permanent coverage of life insurance with a wide premium payment scheme you can choose from. It also provides a probable higher rate of return. A unique attribute of a universal life insurance is that it includes a cash account. You are like investing and at the same time getting a guaranteed death benefit.
4. Variable life – this kind of life insurance is not similar to universal life insurance in a way that even if they have both cash values in the policy, the cash account within a variable life insurance is managed separately, for example the insurer will put it in a mutual fund and be managed by a fund manager.
Why get a life insurance?
If you think that you have no
one to protect to after you are gone, then by all means don’t get a life insurance. It is not the best way to spend your money to. Life insurance is one way of insuring your family’s life or any of your loved ones to be financially free after your death. It provides the means of meeting the obligations that will become due and demandable upon your death.
Not only because your beneficiary can get considerable amount upon your death but life insurance is also one way of investing your money wisely. With all the different types of life insurance which gives you the chance of investing your money and pay you dividends and cash values upon maturity, getting a life insurance is a sure means of getting your hard earned money’s worth.
|
