Introduction
Life insurance is a long term insurance arrangement, which is offered by life insurance companies to provide income to your beneficiaries after your death. Life insurance policies pay out a lump-sum amount of money to your beneficiaries after you die. The common types of life insurance policies are grouped into term life and permanent life insurance.
History
Life insurance companies provide these types of life insurance policies to individuals which will be a source of income to your beneficiaries after you passed away. Selling life insurance policies was traditionally viewed as a taboo in other cultures but due to increasing awareness of the advantages of having a life insurance, individuals are increasingly taking these policies. Also, life insurance policies were designed to pay out after you have died but due to the introduction of different types of life insurance products, people now view life insurance as a form of investment.
Features
The scope of cover for permanent life insurance is to provide cover to the policy holder’s dependencies after his death. The policy will remain in-force as long as you pay the premium and you are still alive, thus the maturity date is determined by your date of death. The premiums are paid throughout your life. Permanent life insurance is further categorized into life endowment, whole life, limited pay and variable life insurance. These types of life insurance were designed to address individuals’ needs. The most common types of permanent life insurance are life endowment and whole life. Life endowment provides cover for a specific period of time and has two options of either renewing the policy or paying out. This policy has a maturity date, meaning that you either get your invested money back plus interest if it matures whilst you are alive or you can renew it. On the other hand, whole life policy provides cover up until you die. Premiums are paid throughout your life, however life insurance companies can indicate the premium payment period such as up to your retirement. Ideally life insurance products are designed to provide financial assistance to your beneficiaries once you passed away.
Another type of life insurance is term life. This life insurance arrangement has a maturity date, meaning that the policy pays out if you die during the term of the policy. A fixed amount of premium is paid throughout the life of the policy and is not refundable once the policy expires. This policy has an option to renew it once it expires.
Tips and comments
Life insurance policies are a form of investment which will benefit your dependencies after your death. The types of life insurance policies offered guarantee your beneficiaries a normal life after your death with income to pay for their day to day expenses such as food, accommodation and school fees. If you are a family man and a breadwinner, taking a life insurance policy is highly recommended so as to adequately plan for the future of your beneficiaries. Taking a life insurance policy is very easy and the process of claiming from the insurance company is simple.
