Life Insurance Plans
Life insurance is often not a fun discussion topic to bring up with your loved ones. The process is even less appealing, which may be why so many people don’t care about it and do not have a current life insurance policy. However, there is no doubt that it is an essential part of life, and it really pays to have it when you need it most.
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What is life insurance?
Life insurance is simply a contract between you and an insurance company. Payouts from your insurance company occur by having your beneficiaries receive a lump-sum payment called death benefit from your insurer. This step occurs at the time of the insured’s death.
There are various types of life insurance plans depending on the insured’s goals and needs. One thing to keep in mind is that, generally, all types of life insurance is tax-free. If you’ve never thought about why you need a life insurance policy, it is time to consider its many benefits. Some important questions to ask yourself include:
What will your children do if something happens to you?
You can never be sure of what will happen tomorrow. Death and accidents can be just around the corner. If you have children, the entire family may become at risk if you don’t have life insurance to help them get back on their feet.
What if you have debt and you were to die tomorrow?
If you have liabilities, like a mortgage to pay off, someone will have to assume those responsibilities if something were to happen to you. That means, without life insurance, your next of kin will end up paying your debts.
What happens to your business if something were to happen to you?
For business owners, it’s crucial to have a succession plan if something were to happen to you. If you have life insurance, you can prepare for this unfortunate inevitability and ensure the right person inherits your business.
Life insurance offers a great way to save money and improve the quality of your life.
Of course, the benefits depend on the type of life insurance policy you choose. On that note, there are three main types of life insurance policies you need to consider.
Three Main Types of Life Insurance Plans
If you decide to purchase life insurance, the three general types include:
- Term Life
Term life insurance is a plan in which the insurer provides the insured with financial protection for a specific period or “term,” such as 10 or 20 years. It’s a great safety net, which ensures that your loved ones can still meet their financial responsibilities in the event of your untimely demise.
- Whole Life
Whole life insurance is a kind of permanent life insurance. So it provides the insured with lifetime coverage. It comes with a death benefit and cash value, which serves as adequate protection for wealth transfer and preservation. Premiums are generally higher and fixed compared to other life insurance options.
- Universal Life
Universal life insurance is also a kind of permanent life insurance, but the policy is flexible. It’s an excellent source of income protection and wealth transfer plan, not to mention the death benefit coverage. The premiums are also higher since it is lifetime coverage.
Life Insurance Policies Are a Smart Investment
Seeing the benefits of life insurance plans goes without saying they offer financial security for you and your family. You never know what might happen tomorrow, so getting protection is an excellent way of making sure your family leads a quality life no matter what life has in store for you.