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Life Insurance

The Importance of Life Insurance


Life insurance is protection that most don’t like to think about but should seriously consider. This applies to both financial planning and family responsibility. It can assist you and your family through the most devastating of times.

What it does

Life insurance is primarily designed to provide financial help to survivors when the policyholder passes away. The payout can be utilized for such things as funeral expenses, remaining debt and, for policyholders still alive, for proper estate planning and for financial help and flexibility in time of need.

How it functions

The policyholder generally pays a monthly premium and, in exchange, the insurance provider pays out a specified amount when the policy is triggered. The person to whom the money is awarded, “the beneficiary,” can choose how the money is put to use. The benefits may also be put into a trust, which can then be paid out according to the terms of the trust. The responsibilities of the insurance provider are put forth in detail in the original contract.

Kinds of coverage

There are some different types of policies available. Whole life is a popular kind of comprehensive life insurance. Policyholders pay their premiums, which are determined from a battery of health questions and the amount of coverage desired. Assuming the policyholder pays his or her premiums on time, the policy remains in effect. Perhaps the most popular option is term insurance. Term, on the other hand, provides coverage for only a set period of time. For instance, should you have a 15-year term policy, you will be covered for 15 years. However, after that period ends, you must obtain new coverage. Universal life offers similar coverage to whole life. However, there is also the option of investing some of the premium. This potentially can increase the benefit amount more swiftly should the investments do well.