A life insurance policy is a legal agreement between an insurer and a policyholder. In exchange for the premiums paid by the policyholder during their lifetime, a life insurance policy guarantees that the insurer can pay a sum of cash to named beneficiaries when the insured dies.
The life assurance application must accurately disclose the insured’s past and current health conditions, yet as high-risk activities, so as for the contract to be enforceable.
Types of Life Insurance
When you begin looking for life insurance, you will be faced with two major decisions: What type of life insurance is best for me? How much life insurance do I require?
There are numerous types of life insurance available to meet a wide range of needs and preferences. Here are the types of life insurance. Click on each one to learn more:
- Term Life Insurance
- Whole Life Insurance
- Universal Life Insurance
- Variable Life Insurance
- Final Expenses Insurance
- Group Life Insurance
How Much Life Insurance Should You Get?
One of the first steps in purchasing life insurance is determining how much coverage you will require. A life insurance purchase should be approached as part of a larger financial plan. A financial advisor can assist you in identifying gaps and strengths in your current situation as well as where you’re headed.
What Factors Influence Life Insurance Premiums and Costs?
- Age is the most important factor because life expectancy is the most important determinant of risk for insurance companies.
- Gender: Because women live longer lives on average, they pay lower rates than men of the same age.
- Tobacco use puts a person at risk for a variety of health problems that can shorten one’s life and raise risk-based insurance premiums.
- Health: Most policies require medical exams to screen for health conditions such as heart disease, diabetes, and cancer, as well as other medical metrics that can indicate risk.
- Dangerous lifestyles can drive up premiums significantly.
- Family medical history: If you have a history of major disease in your immediate family, you are at a much higher risk of developing certain conditions.
- Driving record: A history of moving violations or drunk driving can significantly raise insurance premiums.
What Motivates People to Purchase Life Insurance?
- Taking care of funeral and final expenses.
- Make up for Lost Income.
- Assist with debt repayment.
- Boost your retirement income
- Create Cash Value
- Investment with a tax advantage.
- For business reasons.
- Estate Taxes.
- Pay for College.
- Coverage is reasonably priced.
Since the pandemic, there has been a greater emphasis on providing financial security for loved ones. According to a recent LIMRA survey, 44 percent of households said they would face financial hardship within six months if the primary wage earner died prematurely. Financial hardship would strike 28 percent of households within one month.
