Basically, life insurance is a financial protection people take up in the event of their death. Some people however, think of it as some form of a form of gambling, a morbid one at that. This is because there are types of life insurance policies which you can lose when you lived longer than what was indicated in the term of your insurance policy.
On the other hand, if you die earlier or within the term of the policy, you ‘win’ the bet and the insurance company will pay the promised sum of money to your beneficiary. Clearly, life insurance is like a morbid form of gambling where you bet your life and death for the benefit of your loved ones who will be left behind. Taking up life insurance does provide you with huge benefits financially-wise. It can live your family with large sum of money if you can choose properly as to what type of insurance you want.
To ensure the benefit of both sides, insurers look carefully on decades-worth of data in trying to predict how long you can live. All variables with regards to determining what rate, category or class a person fits into are carefully examined. Although this does not necessarily mean that a person who has had serious health problems cannot be insured. Rather, they will to pay different premiums.
Life insurance has two major types, namely ‘term life insurance’ and ‘permanent life insurance’. As the name suggests, term life refers to life insurance that is effective for only a relative period of time. Alternatively, permanent life is a policy that you have to pay throughout your entire life. The payments for these policies are usually fixed the moment that you purchase the life insurance policy. In the case of permanent life, the younger you are when you purchase for the policy, the cheaper your monthly premium will soon be.
Whoever you are, investing in life insurance is a huge lift from your worries. Life insurance can surely give you a peace of mind with the fact that you can take care of your family even after your death. Aside from that, life insurance can also be used for cover on debts and liabilities upon your death which can greatly ease the burden to your family.
The bank does not simply dismiss your mortgage once you pass away. It has to be paid or else your properties might be seized. But with life insurance, you could have enough money for cover of your liabilities. However, life insurance carries its own risks. One of the risks that you might encounter with having life insurance is the fact that life insurance companies are typically unstable.
Moreover, life insurance companies are typically regulated by the government. Also, when it comes to policies involving cash, you are only allowed to invest in bond, stock or money market funds. With that means the value of your insurance greatly depends on the bond’s performance. In the end, you cannot be completely sure of what you can get from your investment in life insurance.