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Let’s face it, life insurance is a very taboo subject: and with good reason. The thought of us squirreling away cash for loved ones when we’re gone is not a pleasant one, as it reminds us of our mortality. However, this insurance is absolutely vital in helping your family cope financially after your death and without it, they could be left in a seriously undesirable situation. So instead of dwelling on the depressing nature of your inevitable demise and how it will affect those around you, it is a wise idea to get a decent life policy sooner rather than later and have peace of mind that your family will be able to cope if the worst does happen.
Life insurance is not compulsory but it is a good idea to invest in a policy. This is mainly because when an individual dies, their liabilities are passed on to their beneficiaries along with their assets. In other words, debts are passed on too. While some lenders may be generous enough to scrap the payments, others will expect the deceased’s relatives to pay out. Life insurance should generally cover these liabilities, which may include school fees or an unpaid mortgage.
There are two main types of life insurance: permanent and term life insurance. Permanent life insurance gives you guaranteed death benefits regardless of what happens to your health after you have applied for your policy. It also has lifetime cash value, a lump sum that accumulates from a proportion of your premiums that you can draw from at any time you like, at the expense of a quantity of your post—death payout. Term life insurance also carries a guaranteed death payout, but only for the period that you purchased the policy, after which it becomes invalid and your beneficiaries will receive nothing. It also has no lifetime cash value.
The amount you pay as a premium determines the amount your loved ones will receive after your death. Any additional premiums will be converted into extra funds that will be given to relatives in the event of your death. Deciding how much to pay in premiums is a tough choice, but it ultimately depends on how much financial support your beneficiaries will require should you die. This means you may increase your premiums if you have several children, for example.
The price of life insurance varies greatly between providers and also the type of policy you choose, so it is hard to pin an exact price on it. Life insurance is, however, liable to be more expensive if you are elderly or in poor health. Life insurance is generally cheaper for young people because the likelihood of premature death is relatively low. Therefore, you may wish to invest in permanent life insurance from a young age so that after a period of years your cash value can offset your premiums. In other words, cheap life insurance when you’re young can save you money when you’re older!
You should now have a basic idea of what life insurance policy is best for you. Just remember that this difficult step now could mean a lot to those closest to you in the distant future.
Futher Reading: Life Insurance: Term VS Permanent