What Is Life Insurance?

Life insurance is not an unusual term for most people in this world, these days. People today are very much aware of what life insurance is all about and most of them even hold this insurance policy.

Life insurance is insurance on human beings. Under this scheme, the sum assured is offered as an amount of benefit to the relative of the deceased person.

Human life is prone to physical disability & risks to death due to certain natural & accidental causes. Loss of human life or loss of body part due to accident results in loss of income. Nobody expects death or disability. However, such natural disasters occur when he/she least expects.

Life insurance can prove to be a breath of relief in such cases. Although loss of life cannot be filled up by a monetary sum, but it can easily support the family of deceased. Life insurance policies offer a fixed amount of money to the dependants of the insurance holder, in case the life insurance meets death during the period he earns. The life insured would also get money when he becomes disabled due to an accident that has resulted in reduction or even total loss in his monthly income.

This is not all, life insurance is also a method of protecting one’s old age when one is not capable enough to earn or is devoid of income, by deciding to buy an annuity product.

Talking about life insurance products, there are many of them that offer protection & also produce savings to the life insured.

Given below is a list of some of the insurance products and the benefit each of them offers.

  1. Term insurance: This type of insurance offers a stipulated amount of money on the death of the insured during the tenure of contract.
  2. Whole life insurance: Under this policy the life insured’s dependents, get a stipulated amount of money when the insured dies.
  3. Endowment Assurance: This product offers, an already fixed sum of money either when the insured dies during the period of policy or when life assured is alive.
  4. Money back insurance: This product offers fixed amounts, in conjunction with full amount of money assured on death during the tenure of policy. The fixed amounts are payable on specified dates during the tenure of contract.
  5. Annuity: The term refers to a product that offers monthly payments on fixed dates, in case the life assured is alive, on the dates fixed by the company.
  6. Linked product: The product offers a fixed sum of money as well as the amount of money, associated with the underlying value of valuables on the desired dates. The fixed amount of money is offered on the death of life insured.

There are many types of life insurance policies to suit to the requirements for varied categories of people including children, young, adults, old people etc.

Just choose the one that suits your requirements and rest assured.

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Why Do You Need Life Insurance?

Death & accident are two inevitable circumstances in human life. Each one of us knows that death will occur, but unfortunately we feel that it will occur to our acquaintances & not us. Not only death, but also nobody expects an accident and suffers from a huge financial loss due to any sort of disability that occurs in life.

There are many reasons to buy a life insurance policy. Many economic experts believe that life insurance is the basis of wise economic planning. This is not all. You can avail this cost-effective way to take care of your loved ones even after you depart from them.

Given below are certain points that would help points that would help you realize the importance of buying a life insurance policy.

  1. A substitute for income: Most people consider their capability to earn, the main financial asset. Most people even have many dependents who may become helpless once the earning members dies or get incapacitated due to an accident. A life insurance policy would certainly prove beneficial in this case. The policy is devoted towards offering an assured sum of money on the death of the life insured or even proves complementary to the retirement income.
  2. Pay off your debts: Do you want your loved ones to struggle paying your debts, loan installments, credit card debts or medical expenses once you are disabled or after you pass away? No! Trust life insurance & all your house loan or debts can be paid off.
  3. Charitable donations: If you have a favorite aid organization, you can easily assign some of the money from your life insurance to go to them. This would help you offer some amount to people you care as well as prove to be a financial aid to someone who is helpless & do not have a dependable person like you.
  4. Rest assured: Life insurance is a method wherein you pay certain amount of money to the insurance company and eliminate all your worries regarding helping your relatives after your departure or help you add to your income once you retire or are not in a position to work anymore due to certain circumstances.
    Buy life insurance today and rest assured for life & give your loved ones the feel of your caring presence even when you are not with them.

However, we recommend you not to associate life insurance with death & avail it as a process of smart investment & great earnings.

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How Much Life Insurance Do You Need?

Life insurance is the best way to protect you & your family from economic crisis as a result of death or accident. The insurance company is obliged to pay the recipient of your choice, a stipulated amount of money when you die. The amount offered is the return payment of the timely payment of premiums that you make when you are living.

The basic question that arises in one’s mind is that what is the exact amount of life insurance one needs to apply for.

Now the amount of life insurance you need depends on certain factors that you must consider prior to determining. Given below are some important points that you must consider prior to answering the question- how much life insurance do I need.

  • The amount of money your family can afford to pay off your debts such as mortgage loan, rent or other bills in case you die.
  • The amount of debt you currently incur, including all your credit card balances, car loans, student loans, personal loans etc.
  • The amount of annual income your sad departure would eliminate from your household.
  • The cost of funeral.
  • Your desire to leave behind a charity fund in your name.
  • The number of special family members you would like to receive a financial gift.
  • The amount of money your spouse requires to care for a family member with special requirements or your children.
  • The amount you desire to leave behind for the educational expenses of your child.

In addition to considering the above-mentioned points, you must also ask the following questions to yourself & answer them honestly prior to actually determining the amount of life insurance.

  • Should I spare my loved ones for the funeral cost?
  • Do I have outstanding debts?
  • Am I extremely worried that my wife will not be able to pay off the mortgage or credit card debts?
  • How many dependants I have who count on my income?
  • How would my child bear the college expenses?
  • How would I make both ends meet once I retire?
  • How would I be able to earn in case I get physically disabled due to an accident?

Calculate the amount of money you want to leave behind & the money you currently possess along with your other assets including saving accounts, stocks, 401K, CDs, bonds, pension plans & retirement plans. Now subtract the amount of the assets you possess from the money you want to leave behind & decide the amount of life insurance you need to purchase.

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Types Of Life Insurance

A life insurance is insurance on human beings. As per the policy the life insured can easily offer an assured sum of money to his dependents in case he meets death or an accident, resulting in loss of income. It is true that human life cannot be valued by a sum of money but one can always offer a sort of security in terms of money and confidence to your loved ones.

There are two major types of life insurance

  1. Term
  2. Whole life

A whole life insurance is also known as permanent life insurance. The policy includes several sub categories including traditional whole life, variable universal life & variable life.

Term insurance is the simplest form of life insurance. The insurance company would pay the assured amount only in case of death that occurs during the term of the policy. The term of the policy is generally from one to 30 years. Usually, a term policy does not offer any other benefit. The whole life insurance is very popular among people and it is said that in the year 2003, about 7.1 million individual life insurance policies were bought as compared to 6.4 million individual life insurance policies, bought that year.

  1. Term insurance: Term life insurance policy is available in two principle types including level term & decreasing term.
  2. Level term insurance policy: Level term refers to the policy wherein the death benefit stays the same throughout the duration of the policy.
  3. Decreasing term insurance policy: Decreasing term actually means that the death benefit drops by one-year increments over the course of the policy’s term.

Whole life insurance: Whole life insurance or permanent insurance offers the death benefit whenever you die. Even if you continue to live up to 100-years you can be, rest assured that the death benefit would reach your loved ones.
The cost per $1, 000 of plan increases as the insured gets old. The amount really reaches its best state when the insured continues to live up to the age of 80 or beyond.

In this case, the company charges a premium and it rises each year. Since, it becomes really difficult for the person to pay the premium as he or she ages, the company generally, keeps the premium level by keeping a charge over a premium that in the previous years, is slightly more that whats required to pay insurance claims

Choose the life insurance that suits your requirement today & enjoy the benefits later in life.

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Whole Life Insurance

The Whole life insurance policy is ranked among one of the most favorite policies across the globe. Whole life insurance, also known as permanent insurance, offers a death benefit in case the life insured faces loss of life. The beauty of the product is that your loved ones can avail this facility even if you continue to live to 100.

The whole life or permanent life insurance is usually divided in to three major categories namely.

  1. Traditional whole life
  2. Universal life
  3. Variable universal life

Traditional Whole Life Insurance

As per this type of life insurance policy the benefit of death as well as the premium are structured to be the same the whole life, of the policy. In this case, the cost per $1, 000 of plan rises as the insured gets old. The benefit gets really high if the insured continues to live up to 80 and beyond.

Under this scheme, the company charges a premium from the ensured each month. This premium rises each year. It is quite difficult for an ageing person to pay higher premiums on a monthly basis. Keeping this factor in mind, the insurance company usually keeps the premium level by keeping a premium that, in the previous years, is more than the amount required to pay off the insurance claims, utilizing that money & utilizing it further to compensate the level premium. This helps the older people to pay the heavy price of life insurance.

As per the Law, when these types of ‘over payments’ of a life insurance policy reach a specific amount, they are obliged to become offered to the policy owner as a cash value benefit in case he/she opts to discontinue with his or her original life insurance policy.

The cash value is actually an alternative available to the policyholder and not a bonus, under the policy.

In the 1970s and 1980s, life insurance companies introduced two variations on the conventional whole life insurance. They came to be known as:

  1. Variable Universal life insurance.
  2. Universal life insurance.

The whole life insurance policy is more famous among people across the globe. A survey conducted proves that around 7.1 million whole life insurance policies were bought in the year 2003. A tremendous increase in this amount is also expected in the near future.

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