How to choose a Life Insurance Policy
If you have a spouse or children, it will give you peace of mind
to make sure that they will be safe and secure when you pass
away. The best way to do this is to purchase a life insurance
policy. There are thousands of different companies offering life
insurance. But how do you choose an insurance policy that is
right for you?
To help you to make an informed decision when you come to choose
a life insurance policy, you need to understand exactly what a
life insurance policy is, who needs a life insurance policy and
how to distinguish between the different types of policy
In simple terms, a life insurance policy is a guarantee on the
life of the insured person. When the insured person dies, the
insurance policy will give their beneficiaries a specific amount
of money. The insured person makes a payment, known as a
premium, usually on a monthly basis for a given period of time.
The amount of the life insurance policy premium is usually
determined by factors such as the age of the person, their
gender, occupation, whether or not they smoke, medical history,
along with the amount that is required to be paid out on death.
There are four main kinds of life insurance policy.
Whole life insurance policy. - a whole life insurance policy
lasts for the entirety of the insured person's life, as long as
the premiums are kept up to date. As the life insurance policy
matures, it builds up interest, so the longer the insured person
lives, the higher the payment to the beneficiaries will be. Some
types of whole life insurance policy programs also offer
dividends for the insured person.
Term life insurance policy - a term life insurance policy is
policy that pays out to the insured person's beneficiaries as
long as the insured person passes away within the fixed term
specified in the term life insurance policy. For example, a 10
year term life insurance policy would only pay out only if the
insured person passed away within the 10 years. This is the
least expensive type of life insurance.
Universal life insurance policy - a universal life insurance
policy is the most flexible type of life insurance policy. This
type of policy allows you to adjust the term and the premiums to
suit your personal needs. Universal life insurance stays in
effect as long as the cash value can cover the costs of the
policy
Variable life insurance policy - a variable life insurance
policy allows the insured person to decide exactly how the
insurance payments should be invested. With a variable life
insurance policy, it's possible to tie the performance of the
policy with the financial markets.
In general, every person should take out a life insurance
policy, but this becomes even more important if you have any
loved ones such as a spouse, children, or aging parents who are
dependent on you. It's a difficult enough time when a loved one
passes away, but a life insurance policy at least allows you to
make sure that the loved ones you would leave behind would be
taken care of in their time of need.