Do you have kids or someone is financially relying on you? Then, you should consider getting a life insurance. In this insurance, you will have to get a policy or a contract between you and the insurance company. Included in the contract are the monthly premium that you need to pay and the benefits that the beneficiary will receive when you die.
It is not always the relatives that will benefit from the life insurance; it can be a sibling of a dependent adult, an employee, an employer, or a business partner. Furthermore, it doesn’t simply give a monetary value to a person’s life. The compensation will help the beneficiary from the financial consequences when the insured person dies, including final expenses, outstanding debts, mortgages, educational plans, and lost income.
There are four important parts of the life insurance: insurer, owner, insured, and the beneficiary. The insurer is the insurance company that will pay for the claims. The owner is the one who pays the monthly premium to the insurance company. The insured is the person whom the policy centered. Lastly, the beneficiary is the one who will receive the benefits of the policy when the insured person dies.
There are two types of life insurance: term and permanent life. In the term life, the owner of the insurance needs to pay the premium within a stated term that he/she will possibly die, which is usually 10, 20, or 30 years. Thus, there is a possibility that you won’t get anything out of it after paying for decades of premiums. However, it means that you are able to live a longer life. On the other hand, the permanent life doesn’t expire and includes a savings portion. It is further divided into three types: whole, universal, and variable life insurance. The whole life includes investments like bonds. The universal life is usually related to business planning. Lastly, the variable life has an investment option that is similar to mutual funds.