Thursday, October 29, 2009

Life Insurance Explained

Getting a life insurance policy is not something that you will be doing for your own benefit. A life insurance policy will pay out in the event of your death and will help your family to cover the costs of your funeral in addition to hopefully leaving them free from debt. You can incorporate into your policy that on your death your loved ones will be left a sum of money too to help them out, or if you wanted you could get a policy which will pay them a monthly sum for a certain period of time. All of this will help you sleep soundly knowing that you have properly arranged for secure financial help for your family in the event of your death.
Choosing the ideal life insurance policy for you can be quite complicated. Most people do not fully understand the ins and outs of these confusing policies. Term life insurance is a policy which requires you to pay a fixed amount for a specified period of time. This could be terms such as 20 or 30 years depending upon your requirements and your age at the time you take out the policy. You pay the agreed premiums every week or month and the insurance company will pay out the specified amount if you should die within that period of time. If however, the term expires before you die, the policy is over and you are no longer covered. The customer can choose to continue cover once the policy has ended but the premiums payable will no longer be fixed at the previous rate and chances are that they will increase as the customer is now that much older. Term insurance is considered one of the less expensive ways to get a considerable death benefit.
Many people with term life insurance policies were not happy that they could be paying out premiums for years and unless they died, they would have nothing to show for it. Because of this, insurance companies began offering a new form of life insurance called Whole Life Insurance. These policies are designed to be like term life insurance policies in that they consisted of level premiums but they are usually higher than those paid into a term life policy. The difference in these policies is that the customer would also be paying into a cash reserve which would be payable at the age of around 95 or 100. If the customer had not died before then, the cash reserve would be equal to the amount payable on death.
Whichever life insurance policy you choose, it is important to fully research the package you are purchasing and the company that you are purchasing it from.

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