Things To Think About When Considering Life Insurance

As depressing as it is true, the only certainty in one’s life is death. The mystery is when and how it will occur. If time of death was known beforehand, preparations for one’s death could be made. Debts could be abolished, money for funeral expenses could be allocated, and it is possible the money could be saved so that loved ones would avoid financial difficulties. Unfortunately, even with warning, saving that kind of money is difficult and many would say unrealistic. For this reason, many people choose to acquire life insurance. Life insurance is when the insured pays a premium to a company so that beneficiaries receive a predetermined amount from the insurance company upon death of the insured. The amount of the premiums paid by the insured is dependent on risk factors, the amount, and type of coverage desired.

Some of the risk factors include, age, weight, sex, smoking habits, and family medical history. While companies have a specific formula to calculate a premium based on these factors, it should be noted that those who live a less risky lifestyle will have a lower premium.

Most people who are insured, get enough coverage to take care of their debts and help their loved ones financially. A general rule of thumb is that those who have less debt and fewer dependents, will obtain less coverage and have a lower premium as a result.

The type of policy that is most straightforward and commonly known is the Whole life policy. In this policy, premiums can be stopped at a predetermined age and coverage is still maintained.

Another kind of policy is Universal coverage, which is more complicated than Whole policies. An agreement is made that should the policy holder die, the payout amount is X, but the policy holder makes payments into an investment account where once the amount in the account totals X, no more payments are necessary. The amount of money can remain in the investment account to accrue value. An advantage of a Universal policy is that you can change, add, or remove benefits whenever desired and the premiums are low.

What each person wants from a policy varies greatly. With the differences in lifestyle, income, age, and goals, comes an enormous difference in the type of coverage one purchases.

In an ideal world, we would be able to ensure the financial security of our loved ones after our death, but unfortunately the reality is that most people don’t have that luxury and are looking for solutions to that problem. Life insurance is a great way to ensure that not only one’s debts are paid off, but also that money isn’t a concern left to our loved ones upon death.

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