Chapin & Irmo Life Insurance Experts
What Is Life Insurance?
Growing older is inevitable and age brings along many experiences and conditions, whether they may be good or bad. As much as people map out their lives, there are many unforeseeable events that can hinder them from being socially active and financially productive, and the worst case scenario is none other than death.
For some people, getting life insurance is one of the soundest and affordable plans to prevent sudden and hefty financial burdens. But for others, getting an insurance policy is nothing but a waste of money and an inconvenience when the bills start coming in. Contrary to perceptions like these, a life insurance is a good risk management tool that can save you and your family’s lives when you in most need of monetary assistance.
What is a Life Insurance Policy?
A life insurance is a policy that provides a lump sum of money to its benefactors after an agreed period of payments. Generally, it is financial protection or benefit to the owner and beneficiaries of the policy in a given period of time after the loss of a person. The main intentions of this insurance is to compensate for lost income, to pay off debts or bills, to finance hospital and burial fees, to protect businesses, to provide assistance in education, and to finance hospital and burial fees.
Why Should I Get a Life Insurance Policy?
A life insurance policy is generally a means for you to protect your loved ones and your business from abrupt economic challenges. It lessens or removes entirely the problems that may arise by an early or premature death of a person, most especially if he or she is the breadwinner of the family.
Since owners are paying for the policy for a number of months or years, they will be unconsciously saving and allocating a percentage of their income for future use. The accumulated funds can be instantly used when injury, accident or loss occurs. Moreover, when the term ends, some the policy could be an old man’s saving grace when he loses a stable source of income, or if medication and hospitable bills become too costly.
Who are Involved in a Life Insurance Policy?
There are four primary participants in a life insurance policy. These are the insurer, the owner, the insured, and the beneficiary. The insurer is simply put, the insurance company which will be providing the payments and benefits at the onset of a death of an individual. The owner is the one who is in charge of the type of policy, the coverage, and the divisible surplus. Additionally, he is the one who will pay for the lump sum of the policy. The insured is the person whose life the policy is based. And the beneficiary is the person or entity who will receive the life
insurance or death benefits when the insured has passed away. An individual can play multiple roles, and the typical arrangement is the owner is also the insured player in the policy.
What are the Main Types of Life Insurance Policy?
- Term Life: Term Life Insurance is the most affordable and commonly availed among the three. It is strategically designed to ensure its beneficiaries for a certain period of time, usually 10, 20, or 30 years. The premium payment the owner is responsible for does not change over time. Once the term ends, individuals may choose to extend the coverage, but its rates are more expensive.
- Whole Life: This type of insurance is made to provide for lifetime coverage of the insured. Since the coverage is generally the length of the lifetime of the person, it commands a more premium price than the other two, and the price rates are more or less fixed. For those who avail this insurance, they think of this policy as a means to save money in the long run.
- Universal Life: This is another type of policy that has a lifetime coverage, only that it is more flexible in its premium rates. Unlike the whole life policy, it allows the owners to increase or lessen the payment schemes, depending on what they deem fit for their circumstances. The main difference and advantage of this arrangement is that they owners are able to preserve their wealth and transfer fund divisions among or to new beneficiaries.
How Much is the Cost of a Life Insurance Policy?
The cost is determined based on the lifestyle, the status, the health, and the circumstances of the buyers. To determine the premium price, insurance companies calculate and analyze the data to determine the length and amount of coverage.
Overall, no matter how difficult and disheartening it is to talk about illness and death, it is important to have open and honest conversations and preparations that could benefit you and your family in the future. A life insurance policy could be that financial plan that will save you in the end.