Life Insurance Policy – The What, Why and How Of A Life Insurance Policy

A life insurance policy could help you to provide your family with financial security when you die and can no longer look after them. In this article I will discuss the what, why, how, when and where of a life insurance policy. If you are wondering about getting life insurance, then you may want to read this.

What is a life insurance policy?

A Life insurance policy is a contract between an insurance company and the insured which promises to pay out a certain amount to your beneficiaries in the event of your death.

It also sets out the provisions of the life insurance coverage. These provisions include premiums, loan procedures, face amounts, and the designation of beneficiaries, among many other clauses.

Policies may be for term or permanent cash value types of coverage.

Why is a life insurance policy essential?

The benefit from a life insurance policy is not for you. It is to provide for your loved ones, but after you have gone.

After your death, the life insurance money is paid to those who rely on you to give them a secure standard of living, which they might lose if you should die. This is money when they need it the most, with no income tax or publicity.

How does a life insurance policy work?

Term life insurance is only for a certain period of time, and if the policyholder dies during the term of insurance he/she receives the death benefit. In the case of the insured person dying after the policy expires, however, no benefit is paid.

At the end of the term period, the policy expires with no accumulated cash value, and no benefits are payable. Term is the cheapest, but it’s unlikely the death benefit will be paid since the life insurance policy will probably lapse before you actually die.

When a person has family and becomes ill, not only does the sick person need support, but also the family often requires relief. Short-term income protection is an added coverage to life insurance and provides extra cash to cover the family’s needs when one spouse is ill.

You will need to decide on the amount of term life insurance before you start to shop around. Most companies have effective savings rates at $250,000, $500,000 and $1 million.

When can you take out a life insurance policy?

You may be able to get a lower premium for your insurance if you have lowered your cholesterol, lost weight or quit smoking.

A 35 year old nonsmoking male in excellent health can buy a $500,000 term life insurance policy for about $700 per year.

Keep in mind your age determines the length of time the term policy will have a guaranteed level premium. You may not be able to get more than a 10 year guarantee if you are over 50 years of age, so start while you are still young.

Where can you find a life insurance policy?

Finding a life insurance policy is something that you should not rush into.

If you are planning to apply directly for life insurance, then you may find it easier to apply online. All this information will enable you to make the right decision about the best company to get your most suitable life insurance policy from.

Getting online term life insurance quotes can be a very effective and convenient way to save you both time and money when shopping for term life insurance. The quotes are free and you’re never under any obligation to accept any quote that is offered to you.

Life Insurance Plan Online – 7 Terms You Should Know

Being able to search for the perfect life insurance plan online has enabled more and more people to get just the plan they want. Going on line avails the consumer of free quotes on plans not to mention an array of information from which to draw. One cannot hope to get a quality product without being an informed consumer and so before searching for a life insurance plan online it behooves one to become acquainted with the terminology and intricacies of the life insurance world.

There are seven particularly important words and phrases whose meanings have direct bearing on how you streamline your policy. Knowing what they represent is a integral ingredient to the process of figuring out which is the best plan for each individual situation.

And the terms to know are…

1. Face Value

This is pretty self explanatory. If a policy has a face value of $15,000.00 then that is the amount that will be paid out upon death of the policy holder.

2. Accidental Death Benefit

Also known as “double indemnity” this benefit stipulates that an additional amount of money will be paid out if the insured dies due to an accident.

3. Disability Income Rider

This provision pays the insured a set sum each month after the first six months of suffering with a disability.

4. Guaranteed Insurability

This allows the insured to buy additional coverage at any point in their life even if they’ve reached the point where they are considered uninsurable.

5. Incontestable Clause

A good protective device this states that after the policy has been in effect for one or two years the company can’t contest it.

6. Policy Loan Provision

This allows the policy holder to borrow money against a permanent life insurance policy for any value up to the amount of the cash value of the policy at the time of loan application.

7. Waiver of Premium Benefit

This stipulates that the company will pay premiums, should the insured become disabled for a period no longer than six months, from the time of disability.

Affordable Life Insurance Planning

This contemporary world has not only seen remarkable increment in incomes in all walks of life, but also increased the precariousness of the future. Due to this changing environment, the insurance industry has realized that different categories of people require different insurance policies, and they must foresee the purchasers’ burdens in life; they invented many new policies for the customers, such as the whole and term life policy.

Why say affordable life insurance? Because nowadays there are people not only buying for themselves but also family package policies for his family and his children. The family package may include the children’s educational fees for the future as well. Therefore an affordable life insurance has a wider sense and the insurance company drafts new policies from time to time to supply their customers with what they need.

Insurance may impact our life for some ways, whether it is a car, life, health, fire or other type of insurance, there are insurances for every customer. But basically, most people would purchase an affordable life insurance for initial protection, because in future if he purchases a car, for most of the countries, car insurance is compulsory, and which means he has two policies to pay.

There are inflation and higher prices on commodities each day, the medical fees and education fees are costly too. If a person is infested by illness and unable to work, he can no longer support the family but the worst thing is he needs money to pay for his medical bills. Insurance companies provide customers coverage on this crisis by medical policy; the insured can purchases hospital benefit to obtain protection, the insurance company will pay for his medical fees if he should fall ill and need medical care.

Therefore as you can see, a person cares for his family has many things to consider. If he is not working he needs money for medical care, he may think of buying a medical policy, which means he has another premium to pay.

Life insurance planning needs to think far ahead, a solicitous person with great responsibilities may have a few policies to pay.