What Is Life Insurance?
Life Insurance is an insurance policy that provides an agreed amount of cover over an agreed term, so that should you die during the policy term, a lump sum is paid out. Life insurance is considered as the cornerstone of financial planning. It is a cost effective way to provide for your family after you are gone.
Many of us will at some stage in our lives have the need for life insurance. Life insurance is an agreement between you and an insurer and under the terms of a life insurance contract, the insurer promises to pay a certain sum to a designated beneficiary when you die, in exchange for your premium payments. This may give you peace of mind that, should you die during the policy term, your family would have some financial security.
The most common reason for buying life insurance is to replace the income lost when you die. For example, say that you work, and that your income is used to support yourself and your family. When you die and your income stops the life insurance proceeds can be used to continue to support the family members you've left behind.
If you have dependants or your income is needed to maintain your family's standard of living you may need life insurance. If you died your family could use the money to pay off some outstanding bills or perhaps towards a mortgage. There may also be extra costs to deal with that were not there before; such as the cost of extra childcare. To decide if you need life insurance you will need to consider whether your family could cope financially without you and for how long.
Some people choose to take out a joint policy with their partner. This means the policy covers both people and is paid out when either person dies (but not both).
There are several kinds of policies that may be available to you, if you are healthy enough:
Term Insurance is the basic life insurance. It provides financial protection bound by a specific time, usually between one to thirty years. They are comparatively inexpensive and are well suited for specific purposes, like insurance protection for paying off a mortgage or paying the tuition fee for college education. Purchasing term insurance is like renting a car, a short-term solution. Monthly costs are lower, but you will not be building any equity.
Permanent insurance provides long-term financial protection. These policies include both a death benefit and, in some cases, cash savings. Purchasing permanent insurance is like buying a car instead of renting. You are taking care of long-term needs with a long-term solution. Your monthly costs may be higher than if you rent, but your payments will build equity over time.
The cost of life insurance varies depending on such factors as the insured's age, health, and occupation.
You may freely reprint this article provided the author's biography remains intact:
About The Author
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.
Life Insurance Fears Post The London Bombings Tragedy
Following on from the tube train and bus bomb attacks in London there was a move from several UK insurance companies to reassure victims that claims would be processed "quickly and sympathetically". This need for reassurance came in light of concerns that many victims of the blasts would not be covered by their existing health and life insurance cover. This would mean that families of the bombing victims could not only lose a relative, but also suffer financial hardship as life insurance companies refuse to pay out on policies.Standard Life, Axa-PPP and Norwich Union all announced that policy holders would be covered for events on the 7th July. Standard Life said that...(related: Insurance)
Medical Bankrupticies: What You Can Do To Protect Yourself
First the bad news: about 2,000,000 personal bankruptcies each year are caused by unexpected medical expenses. Of all those people, 1,500,000 have (or had) health insurance before they ran into difficult financial straights.But wait a minute. Isn't the whole idea behind health insurance - security? The financial security that comes from knowing that you're covered if something goes wrong with your body? You say you're covered, but what if your medical "situation" exceeds your policy limits? Then what?No one wants that to happen, so the question is: are there other options? For instance, is there a way to "insure" against getting sick in the first place? Most peo...(related: Insurance)
If You Rent A Home, Protect It By Buying Renters Insurance
Renters insurance is often overlooked by people who are renting their house or apartment. Many people don't realize that their landlord's insurance only covers the building that you live, there in no coverage for your personal belongs. Renters insurance...(related: Insurance)
The Life Insurance Policy And Its Best Kept Secret
Do you love someone deeply enough to spend your hard earned dollars on a life insurance premium -- month after month?After all, the benefit from a life insurance policy isn't for you. It's for the ones you love, but after you've gone.Life insurance is money paid to those who rely on you today to give them a secure standard of living, which they can lose in a heartbeat.This is money when they need it the most ... with no income tax or publicity.Buying a life insurance policy can be challenging because it isn't an easy subject matter to begin with.Most people get somewhat confused about how it works and whom they can trust enough to make t...(related: Insurance)
Why Should You Shop Around For Auto Insurance?
How do you know if what you are paying for your insurance is a good deal? What is a good deal? Is choosing the cheapest company the best way to go? Does buying from the ...(related: Insurance)
Disability Insurance For The Long Term
Disability insurance covers you for an extended period of time. Should you be injured or take ill and as a result be unable...(related: Insurance)
Motor Insurance With Pass Plus
Is pass plus really worth it? What motor insurance discounts are available to people who have passed the course? Is it easy?In the UK, pass plus is run by the driving standards agency who administer the course. Pass plus was set up by the DSA in conjunction with isnurance companies who wanted to reward young drivers who took a responsible attitude towards tehir safety on the road.The course consists of six varied one hour lessons. You can only take the course once you have passed your driving test. Your driving instructor has to be recognised to be able to instruct on the course.The process is that you take six lessons. Each lesson is designed to educate newly qualified drivers in ...(related: Insurance)
Mortgage Insurance Plans: How Good Is Yours?
Mortgage insurance, to pay off a mortgage, is something you'll inevitably be asked to take out by the bank. Mortgage insurance is necessary so that if something happens to you or your spouse then your loan will be paid off which is good news for your family and the bank. Banks act as if doing you a favour by offering mortgage insurance through their own group plan. Are they?Mortgage Insurance Is Probably A Much Better Deal From Any Number Of Insurance Companies.Mortgage insurance is no different than term life insurance; in fact it is term life insurance. With either, your policy ...(related: Insurance)
Natures Fury - Time To Check Your Insurance
The communities of Exmouth and Moora in Western Australia don't have a lot in common with Sydney.But this year there is a uniting bond. All have felt the full force of Mother Nature.Flooding in the Wheatbelt town of Moora caused an estimated $10 million dollars worth of damage to homes and property. Cyclone Vance ripped through Exmouth in the North West of the State costing the community millions more. Sydney's hailstorm bill has topped $1 billion and is still rising.All this is a timely reminder...(related: Insurance)
What Is Term Life Insurance?
There are two different types of life insurance, term life insurance and permanent life insurance. Term life insurance is the easier of the two plans. This plan supplies you with death protection for a pre-determined amount of time, anywhere from one to 30 years. If you happen to die while paying on this type of policy your beneficiary will be paid the amount of money you specified when purchasing the policy. If at the end of the term you are still living your death protection...(related: Insurance)
What Is Home Insurance?
Home Insurance is designed to provide you with financial protection against any damage and possible risks that your property and possessions within it may face against unforeseen events and circumstances.Home insurance is commonly taken to describe both buildings insurance, which insures the fabric of your property, and contents insurance, which covers your belongings.Basically it is a contract you make with an insurance company. You have to pay a premium and in return the insurance company will pay for financial losses that are related to your property or your home during the period of the contract.Home insurance, also known as Household insurance or Buildings and Contents insurance, provides protection against loss...(related: Insurance)
Car Insurance Advice For Young Drivers In The Uk
Over the course of the last ten years, car insurance for young drivers in the UK has increased substantially.This has caused many problems for new drivers with premiums averaging £1300 for a newly qualified 17 year old male driver.Young female drivers pay a lot less for their policies due to their reduced risk of being involved in an accident. EEC law is looking to make this a discrimination issue but insurance companies and representative groups are opposing this move.The main factors which will effect your insurance premium are listed below;The Vehicle - Choosing the right vehicle will have a mass...(related: Insurance)