Why You Need a Life Insurance Policy
In life, the only thing you are sure of is that one day you are going to die. Your hope is to die old, wealthy and to leave your beneficiaries with enough funds to help them survive without you. However, events do not always unfold the way you want them to, and you could easily meet your death through a car accident, heart attack or any other unprecedented occurrence. Life insurance is one way to safeguard you against the unknown.
This type of policy acts as security for your beneficiaries upon your demise. When you purchase it, you are required to make monthly, quarterly or annual payments depending on the term of your policy. The term can range from one year to a lifetime. In the event of your death, the insurance provider issues a lump-sum amount, also known as the death benefit, to your beneficiaries.
Who Is It for?
If you are married with no children, this type of policy will enable your surviving spouse to pay for debts such as car loans, credit card balances, mortgages and utility bills. If you are married with children, this policy ensures that your family can meet their financial obligations upon your demise. For single parents, it safeguards the financial future of the surviving children.
How It Works
When applying for this type of policy, you will be asked about your medical history, lifestyle, hobbies, credit history, driving record and travel habits. The price of the policy is determined based on your sex, age and medical condition. Upon your demise, the beneficiary is required to fill out a claim, provide a certificate of death and confirm the date and cause of death. After the petition is approved, one lump-sum amount is paid out to the beneficiary.
Different Types of Coverage in Existence
The term cover is an affordable policy that offers financial protection for a set period, 10 to 30 years. The universal cover provides lifetime coverage and allows you to increase or decrease your premiums throughout your life while the whole life insurance provides lifetime coverage with fixed premiums.
One of the major benefits of this type of policy is risk coverage. It ensures your beneficiaries are financially covered against an unforeseen event. The other benefit is that it is an excellent means for retirement planning, and you can use the money you have saved for retirement. The policy also allows you to cater for loans and mortgages in case of an unforeseen occurrence.