What Is Life Insurance?
Life insurance is a legally binding contract between you and your company, where the company guarantees a predetermined payment in your death. That is called a death benefit, and the amount is going to depend on your insurance premium. The premiums are more often than not paid monthly and are usually smaller in amount than other types of insurance. When you’re getting life insurance, you’ll have to thoroughly disclose your current health, activities, and medical history. You can get rejected for it if you’re considered a high-risk applicant. Just because one issuer has been rejected, you don’t mean that every issuer will. In short, the lower the risk, the lower the monthly premium you’ll have to pay.
The life insurance term can be voided if the customer fails to pay premiums, surrenders the policy, or breaches the contract. Life insurance is one of the most important types of insurance for numerous reasons. One of the main reasons why life insurance is so popular is financial wellness. In the case of a tragedy, life insurance will secure your beneficiaries. This type of insurance is essential for families – people looking to leave an inheritance or business.
The Types Of Life Insurance
There are more than a couple of types of life insurance. Different types are going to cover different signs to a different extent – and their premiums will vary wildly. Depending on your unique needs of financial capabilities, you’ll want to pick a different policy. See also: Insurance in Canada Guide.
- Term Life. A term life policy lasts several years and then pays out after it ends. That can be 10, 20, 30, or in some cases, 40 years. The longer a life insurance policy, the bigger the eventual payout.
- Increasing Term and Level Term. An increasing term life insurance policy is a policy where the premium increases every year. A Level term policy is a policy where your premium will remain the same throughout your insurance.
- Permanent & Whole Life. Permanent life insurance is what most people think of when they imagine life insurance policies. It’s a policy you pay until your eventual departure, or until you void the contract. Whole life insurance is a permanent insurance type that amasses cash value over time.
- Single-Premium. Single premium life insurance is a type where you make a one-time payment instead of monthly or yearly payments.
- Life, Guaranteed, Indexed, and Variable Universal Insurance. A universal life policy is a permanent insurance option where cash value earns interest over time. Guaranteed universal insurance doesn’t build up cash value. Indexed universal insurance allows the policyholder to earn a preset or equity-indexed sum of the cash value return. Variable life insurance is a policy where the policyholder can invest the cash value into aspiring prospects.
- Burial Insurance. Burial insurance is a low-cost insurance option that gives out a symbolic death benefit. It’s usually taken by less financially advantaged families to help with burial costs. Besides these standard types, your insurance company might offer additional packages, perks, and features.
Life insurance is one of the most important investments you can make in yourself. It’s a proactive step to protecting your beneficiaries’ financial security and could relieve your family of unnecessary financial stress upon your departure. There are different types of insurance for your needs, and they don’t all include death benefits.