Getting life insurance is a great thing to do in order to protect your beneficiaries when you are no more. However, there are different types of life insurance, and you need to be careful in selecting the one that will be beneficial to your situation.
Comparing quotes from different providers before purchasing a life insurance policy is very important so that you are able to choose offers best suited for your needs.
Life Insurance: What Does It Cover & Who Needs It?
Simply put, life insurance covers costs related to your health or death, e.g., medical bills related to injuries or health conditions and funeral expenses in the event of death.
When you make regular premium payments, your beneficiaries are guaranteed to receive a cash payout known as the death benefit, which can be spent however they wish, e.g., to clear a debt, ensure continuity of a business, etc.
Life insurance is surely needed in certain situations; for example, if you have family members, like your children, spouse, or adult relatives, depending on your income for survival, they’ll need to be protected from the potential loss of your income.
Another reason why you might need life insurance is if you’re a business owner and you wish to ensure the continuity of your business even after your death without worrying about financial struggle.
Lastly, if you have acquired debt in your lifetime, you’ll be needing a life insurance policy large enough to clear your debts so that it doesn’t end up being a burden to your family or next of kin after your death.
Types of Life Insurance
The two main types of life insurance are term life insurance and whole life insurance
Term Life Insurance:
This insurance coverage is limited to a specific time frame, usually ranging from one to thirty years. The death benefit will only be paid out if you pass away during the policy’s term. It is relatively cheaper than the whole life insurance. Once your option expires, you can let the policy lapse, renew it for another term, or change it to whole life insurance, which will pay out your death benefits regardless of when you pass away.
Whole Life Insurance:
This insurance coverage has no expiration date and lasts for your entire lifetime. The regular payment of premiums ensures that your beneficiary receives your death benefit, no matter how long you live.
Life Insurance Rates
The average cost of life insurance will differ based on factors such as:
- Type of policy
Generally, the higher the risks you are exposed to, the higher will be the cost of your insurance policy.
Life Insurance Rider
These are additions to your insurance policy that can be availed for an additional cost. Some common life insurance riders are as follows:
- Guaranteed insurability: It allows you to purchase additional coverage without undergoing medical examination
- Waiver of premium: It pays your premiums when you become disabled