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Life Insurance Protection Policies for children to old persons

Life insurance is a contract between an insurance policy holder and an insurer where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum.

Life-based contracts tend to fall into two major categories:

Protection policies – designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance.

Investment policies – where the main objective is to facilitate the growth of capital by regular or single premiums.

Need and advantages – Life Insurance Generally a human being is an income generating asset.

Loss of income

Income can be lost either due to:

  1. Unexpected/ pre-mature death of the person who generates the income/revenue.
  2. Sickness/ critical illness
  3. Disability due to accident

All these may or may not happen. Insurance covers 2 basic certainties of Life,namely the Risk of Dying Too Early, and the Risk of Living Too Long.

In case of pre-mature death of the revenue generator in the family, the dependents shall be subjected to hardships. Adequate life insurance cover can provide the buffer against the shock of early death and relieve the financial stress during the period of adjustment.Hence, life insurance is necessary to provide financial security to the dependents in case of the income earner dying early.

How to choose the correct Insurance

Choosing the right type of life insurance can be confusing, but it’s also an important decision. Here are some guidelines that can help you narrow down your best life insurance options.

You should consider term life insurance if:

You need life insurance for a specific period of time. Term life insurance enables you to match the length of the term policy to the length of the need. For example, if you have young children and want to ensure that there will be funds to pay for their college education, you might buy 20-year term life insurance. Or if you want the insurance to repay a debt that will be paid off in a specified time period, buy a term policy for that period.

You need a large amount of life insurance, but have a limited budget. In general, this type of insurance pays only if you die during the term of the policy, so the rate per thousand of death benefit is lower than for permanent forms of life insurance. If you are still alive at the end of the term, coverage stops unless the policy is renewed or a new one bought. Unlike permanent insurance, you will not typically build equity in the form of cash savings.

Life insurance types and options

Four major types of non-variable life insurance coverage are:

  1. Term Life
  2. Whole Life Guarantee
  3. Universal Life
  4. Index Universal Life

 



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