What is Life Insurance?

What is Life Insurance?

Life insurance is a contract between you the policy holder and the insurance contractor. This is an agreement whereby the insurance policy holder agrees to pay a specific life insurance rate, and in return, in the event of his death, the policy’s premium would be paid out to his beneficiary(s).

Why You Need it?

Life insurance is an investment in your family’s future and the most secure way to ensure their financial security in the event of your death. If you die, your family will lose your income and be forced to pay the monthly expenses out of a much smaller pool of money. Life insurance can help cover some or all of this lost income, plus the costs of the funeral, depending on the policy that you choose.

Types of Life Insurance

There are two general types of life insurance to choose from; temporary and permanent, each of which has subcategories with differing policy features.

Temporary – Temporary life insurance, also known as term life insurance, is a life insurance policy where the policyholder pays a specified premium in return for a guaranteed payout if he dies during that time. Depending on the policy, once the time period is up, there may be the opportunity to renew.

Permanent – This is life insurance that remains in place until the policy matures or the policy holder cancels the coverage. The only way the insurer can discontinue its insurance coverage to you is if there is evidence of fraud on your life insurance application. Permanent life insurance holders can usually have early access to their benefits in the cash value by withdrawing money, borrowing the cash value, or surrendering the policy and receiving the surrender value.

Life Insurance Premiums 

Life insurance premiums are unique to each policyholder and their perceived risk. If you have a history of medical problems or take part in activities that are deemed high risk such as skydiving, for example, then you will likely pay a higher premium. But do be honest. If you neglect to tell the insurance company the full truth about your medical history or activities your insurance will be void. That is, you will receive nothing.  Please go to our life insurance quote page if you are interested in getting a free life insurance quote.

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