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.

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.

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.

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.

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.

Term Life Insurance

A policy is referred to a printed document issued to the policyholder by the insurance company. The document states the terms of the whole insurance contract. The terms stated on the document include features on the premium, death benefit, cash value utilization options & various other benefits.

There are various types of policies available to benefit the consumer today. Term life insurance is such a type of insurance policy that benefits the insured in many ways.

Term insurance is the simplest form of life insurance available for the consumers today. The policy is dedicated towards paying in case death occurs during the term of the policy. The term of the policy is usually from one to 30-years. This policy does not include any other benefit provisions.

Term life Insurance policies are basically of four types:

  1. Renewable term insurance: This policy works towards eradicating your requirements to succumb to a physical examination on renewal of your policy. In this case the company consents on renewing the policy even in case of the insured person’s decline in health. However, one must be thoroughly ready to pay high premiums with each renewable during the purchase of this plan.
  2. Convertible term insurance: This policy offers an access to the buyer to change from term to permanent life insurance with no requirement of failing to a health inspection. The best part is that as soon as your conversion to a permanent plan occurs, it would not increase your premiums even if you opt for the renewal of the term plan.
  3. Level term insurance: This type of a term policy offers a permanent premium for a previously stipulated period of years. The period of time is usually 10 or 20 years and the benefit of death in this case remains the same. This policy will lock you in particular price for the tenure of the policy. One flipside of this plan is that the rate would significantly rise in case you plan to renew with other policies.
  4. Decreasing term insurance: This policy can be bought with as less as $250, 000 worth of coverage to start with. Under this policy, the death benefit would decease throughout the policy. In case you start off your policy with $250, 000 worth coverage, your benefit will be decreased by $10, 000.

Decide on buying the term policy that suits your budget & requirements. This would facilitate you to enjoy the investment you make.

Which Type Is Right For You?

Buying a life insurance policy? Great & wise decision indeed! However, it is equally important to choose the right kind of life insurance for yourself to avail maximum benefits in future.

Here are some tips for you that would help you determine the type of policy that you must settle for.

Term Life Insurance

We would strongly recommend you to choose a term life insurance if you desire to insure yourself for a stipulated tenure of time. A term life insurance facilitates you to keep up to the length of the term policy as is required.

For instance, you have children & you are looking for a policy that would ensure that funds would be paid out for their higher education; it would be wise on your part to buy life insurance for 20-year term.

In case you desire to pay off a debt via insurance, buy a term policy for the specified time period it needs to given, without giving a second thought.

You may also consider a term life insurance policy, in case you have a limited budget & desire to buy a big amount of life insurance. Generally, this type of insurance gets paid only in case you do not continue to live during the tenure of the policy. Hence the rate per thousand of death benefit is less than required for other permanent types of life insurance. In case you remain alive when the term ends, the coverage automatically discontinues unless you decide on renewing the policy.

Here, you would not be building equity like permanent insurance as cash savings. Try choosing ‘convertible’ term policies in case you think that your financial requirements will change.

Convertible term policies offer you an access to convert permanent insurance without a medical examination in exchange for higher premiums.

Remember, that premiums are lowest when you are young & tend to increase on renewal as your age advances.

Permanent Life Insurance

You require life insurance the period you continue to live. This type of a policy would increase the savings amount for you. These would rise on a tax-deferred policy and could be a source of borrowed funds that you can utilize for many reasons.

There are several types of permanent insurance policies such as whole life insurance, universal life insurance, variable life, and variable or universal life.

The key is to determine your requirements prior to deciding on a type of insurance policy.

How To Buy Life Insurance

Buying an individual life insurance policy includes the process of choosing a particular company, the plan, the benefits & features suited for your requirements.

You may approach a life insurance agent or a company representative who sells property & liability insurance for your home, business or auto.

Generally, discounts are not offered in a life insurance policy. However, it would be simple & wise to trust a single advisor for all your insurance needs. This can really make your financial life simpler & less complicated.

There are many insurance brokers & agents who sell individual policies. An agent is benefited by an amount of commission that you pay to the agent or broker once you actually buy a policy for yourself. The commission is also known as ‘Load’ that is built in to the premium rate.

The commission work towards as a compensation for the agent or broker who has spent time advising you, on the amount you must invest and the facilities you get on applying for one.

The agent is also available for you for any service, you require in future such as renewal of the policy, premium payments or arranging policy loans & even coordinating your financial plans with your lawyer & accountant.

You can also avail the two other ways to buy individual life insurance. You can easily buy a life insurance policy from a savings bank in Connecticut, New York and Massachusetts. You can even by a policy directly from an insurance company or from a fee-only financial advisor. This type of policy is also known as a ‘no load’ or ‘low load’ policy.

This type of policy does not offer any sort of commission to the agent; however, the company will still have changes built in to the premium, so that it covers its marketing expenses, application processing expenses & other subsequent services.

The crux is to find out an insurance company that would sell you a no-load policy. The process is not easy but Internet search engines would make it possible for you.

As per the group policy system, you can buy the life insurance policy automatically from your employer. Most multinational companies offer this facility to their employees.

You may also buy the insurance from a union or trade association or other group you belong to, such as an automobile club or a college alumni association.

There are many credit cards & lending institutions you can approach to buy life insurance.

Group Term Life Insurance

A group term life insurance policy refers to a type of contract between an organization and the employee working in it. Under this scheme, a life insurance coverage is offered to all the employees of an organization. It can also be obtained by a group of some other category of people who apply for it.

The policy would offer coverage for the unexpected death of an employee. The benefits offered in this case are generally computed, keeping in mind, the income wages lost by the employee.

Generally, a group term life insurance policy is inexpensive when compared to other individual life insurance policies. This type of a life insurance policy costs very less to the insurer. Apart from being affordable, group term life insurance is also very easy to obtain, as one doesn’t have to go through a lot of paperwork. One also does not have to struggle a lot with qualification criteria, when purchasing a group term life insurance policy.

As far as the organizations are concerned, the process of offering this type of a life insurance policy to their employees is lot more to handle for them as well.

A company finds it much more affordable offering group term life insurance to its employees, as compared to other individual life insurance policies for each employee. There are guaranteed multiple accounts from one sale & this is considered as their incentive for offering this type of policy.

It has really become very important to offer competitive benefits and allure the best employees, in order to run the company well. Offering group term life insurance policy would prove to be a great option for both employer as well as the employee.

As an employee of an organization, if you quit the organization, you don’t have to worry about the benefits of life insurance you leave behind.

Most group term life insurance plans offer the flexibility of converting them in to individual policies under the circumstances, where an employee quits the organization.

The insurance premiums are tax-deductible, and this feature makes group term life insurance, an attractive and preferable policy.

The routine individual physical examinations that one must go through for many individual policies are exempted in the case of group term life insurance. This feature is the best one that would attract any proficient & qualified employee to your office.

Buy a group term life insurance today, as it is a great benefit to you as well as your employees.

Smoker Insurance

A new comer in the field of insurance, the smoker life insurance policy offers a compendious life insurance to smokers.

Addiction to tobacco products can lead to major health hazards. It is also true that most people, who are looking out for an opportunity to abstain from smoking, actually end up being physically weak due to the harmful effects of cigarette they’ve been consuming all the while.

Life insurance companies came up with many opportunities and policies for non-smoker. However, there have been none that could be helpful for the smokers.

Today, with the advent of smoker life insurance policy, there seems to be a silver lining to the dark cloud.

There are many ways to look for smoker term life insurance and one of the best is websites online. Looking online for a smoker life insurance policy is the most convenient & fastest medium. You can be sure of availing the best and most affordable policy that is available under the sun via Internet.

You must make some research prior to settling for a particular policy. Most people generally limit their possibilities of availing the best policy because they look in for just a few term life insurance companies. We would suggest you to choose some websites, having a large database of term life insurance companies and deal with smokers.

Remember that you may be required to go through some nicotine examinations prior to taking a life insurance policy. Once it is confirmed that your system contains considerable amount of nicotine, the insurance company would declare you a smoker & offer you the smoker life insurance policy.

Deciding to purchase a smoker life insurance policy is wise on your part if you are a smoker. However, there are a couple of factors you need to take in to consideration prior to applying for one.

The first important thing is to be honest. Never lie on your insurance application. There are chances that you get caught during medical examinations that determine the nicotine amount in your system.

The insurance company would deny payment for the costs acquired by death as a result of smoking, in case you quit smoking long enough to pass the medical exam & resume later.

Also look for any discount possibilities your insurance company may offer you.

A smoker life insurance policy would definitely prove to be the lifeline for you in case you are a smoker. Purchase it today.