Types of life insurance should you know

What is life insurance?

Life insurance is a contractual agreement between you as a policyholder or insured with an insurance company as an insurer where the insurance company will pay the nominal amounts of money in case of risk of death against a party to the holder of the insurance policy. You as the insured is obliged to pay a certain amount of premium to be beneficial to provide a replacement upon Your risk of death. In other words, life insurance is a type of insurance that aims to take away those against unexpected financial losses, which are caused due to the insured dies.

Why Buy Life Insurance?

 

  1. As a protection against loss of Income for the family
  2. As protection risk died of diseases the main causes of Death

 

  1. One way of saving or Retirement Preparation

Types Of Life Insurance

There are several types of life insurance products that surely each has different benefits. Types of life insurance aims to serve a variety of needs, abilities, and purchasing power

  1. Term Life Insurance

term life insurance is its function to give protection to the insured within a certain period only. Life insurance is usually offered contracts for 5, 10, or 20 years, with a fixed premium and countless cheap.

Is recommended that you choose this kind of life insurance if you give priority to the future of your family especially children education. Suitable for those who have a need for a huge insurance costs but have limited financial ability.

If you choose this, some life insurance benefits are:

  • you as a policyholder get freedom in determining the magnitude of the premium in accordance with your abilities.
  • sum assured that you can get as the policyholder could reach billions of dollars. That is, if the insured dies during the contract is still active, then the family of the insured will get a sizable sum assured.

Meanwhile, the lack of this type of insurance are:

  • the insured could lose the money already paid premiums or premium charred the contract is complete when not experiencing health problems or died until the contract is completed.
  1. Whole Life Insurance

whole life insurance provides protection for a lifetime, even though insurance companies typically limit the benefits of the protection to just 100 years.

Life insurance is recommended for those who have no dependents and wanting more benefits than just compensation for the death, or you are interested in the idea of long-term savings. So, if you want the protection of inhabitants at time savings for emergency needs such as paying hospital bills, you can consider buying this type of life insurance policy.

The advantage of this type of insurance are:

  • policyholders it may be possible to get the cash value of the premiums already paid.
  • When you as the insured could not pay the premium installments periodically, you can use the cash value of the premiums already paid to pay the premiums.
  • insurance premiums that you have paid will not be forfeited if no claim.
  • When contracts ended, the sum assured will be paid at all.

Meanwhile, the drawback is:

  • greater than the premiums of life insurance premiums in futures, even can reach more than two times. The reason of the high premium it is because society’s life expectancy is only 65 years for men and 70 years for women, so the possibility of insurance claims before the protection ended higher.
  • the cash value of the total premium paid is not too large because the flowers for this insurance is usually only by 4% per year, and this figure has not cut taxes.
  1. the Endowment Insurance

endowment insurance in accordance with his name is insurance that has two benefits, namely life insurance as a forward at the same time savings. This means that you as a policyholder can get the cash value of insurance premiums that you have paid in the form of sum assured if the insured dies within a certain period in accordance with the policy of the insurance policy in question and also be able to draw an insurance policy in a certain time before his contract ends.

This type of insurance is recommended for those who want to ensure the availability of more funds for the education of children, want to have funds for unexpected needs in the future, and want to have a retirement fund.

The advantage of this type of insurance are:

  • as already described above, you can claim this life insurance policy before the contract expires, for example, to fund your child’s education. But withdrawals can only be made once in a period of several years in accordance with the agreements that have been made.
  • If for example, you as the insured is still alive when the time period expires, you will get the entire sum assured.

Meanwhile, the drawback is:

  • because the type of life insurance has two benefits, like combining the benefits of futures with life insurance whole life insurance, so the premiums is large enough, it could reach millions of dollars per month.
  1. Life Insurance Unit Links

Life insurance types of link units combine the benefits of insurance with investment, but didn’t and most often offered by an insurance agent. If you are interested in but didn’t understand about investing and wanting to keep make sure your soul still get the benefits of protection from death, you can choose the type of life insurance.

The advantage of this type of insurance are:

  • you as a policyholder does not just get a guarantee of protection alone but also the yield of an investment with a high enough interest rate each year.

While the disadvantages are:

  • Return back from its investments less significant when compared to the pure investment such as stocks, money market, or mutual funds. If you are looking for a huge profit from the investment, you should not rely on life insurance link units.
  • the sum assured will be retrieved belong to low, especially if the investments fail or just making a profit.

Carefully Before Buying

You need to remember that before you buy a life insurance policy, you are advised to seek information as many and compare quotes from multiple insurance companies, for example with regard to the protection offered and the magnitude of the premiums you have to pay, and customize with your ability. Consider also the number of dependents You any funds and needs that will arise in future in choosing the type of life insurance. The bottom line is You need to do careful planning according to your needs before choosing a life insurance product that you will purchase so that the benefits of the protection you get from the optimal insurance products. Remember, the principle carefully before buying also apply to life insurance products that you do not feel aggrieved.

 

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