What Is Life Insurance? Know Different Types of Life Insurance Plan
Life insurance is a financial product that allows you to leave money to your family if you pass away. This money can be used to maintain them for an extended period, replace lost income, or pay off a significant debt like your mortgage.
For life insurance, you pay a monthly premium. The amount you pay is determined by your age, health, lifestyle, how much coverage you require, and the type of policy. This article will learn more about the various types of life insurance, how they work and how to find affordable life insurance.
Different Types of Life Insurance Protection:
#1 – Term Insurance:
Term life insurance is the most basic type of life insurance. It provides you to choose how much you want to be insured for and how-long you want to be covered.
If you die during the insurance period, your beneficiaries will get a payment. However, the policy does not payout if you do not die during the term, and your premiums are not refunded.
There are three main types of term assurance: level–term, decreasing-term, and increasing-term insurance.
- Level term
- Increasing term
- Decreasing term
#2 – Family Income Benefit Policies:
A decreasing term policy is a type of family income benefit insurance. Instead of a lump payment, it provides your beneficiaries with a regular monthly income until the policy’s expiry date if you die. First, determine what kind of income your family would need to be financially stable if you died at the onset. There will be no monthly payout to your loved ones if you die after the policy’s term.
#3 – Whole of Life Policies:
Whole of life insurance is an ongoing policy that pays out when you die, whenever that may be.
These life insurance plans are more expensive than term assurance policies, which only payout if you die within a specific time-frame. But, again, it is because it is expected that you will die at some point (and thus that the insurance will have to pay out).
Balanced cover and maximum cover are the two basic types of whole of life policies:
Is it ok for you to have life insurance?
Having some life insurance in place is essential if you have financially dependent people, such as children or a partner with whom you own a home. Would your loved ones be able to cover your monthly mortgage repayment and other household costs without your income if you were the family’s sole breadwinner?
Moreover, the death of a parent might lead to additional expenses, such as a greater demand for childcare. With older or adult children, or a paid-off mortgage, these costs may be less important, so term life insurance appeals.
Some whole-of-life insurance policies offer you to cash them in and get a portion of the proceeds before you die. If you’re ready to do so, double-check your policy’s terms, as the surrender value of your insurance could be much less than the amount you’ve paid in premiums over the years.
How can I get low-cost life insurance?
Life insurance is currently sold by more than just banks, building societies and insurers. Supermarkets and high-street businesses are also worth examining. Frequently, one firm sells the life insurance plans of another. So even if the core product is identical and provided by the same insurer, the amount you pay will vary based on where you buy it.
- A Word Of Caution: just because you can get cheap life insurance doesn’t mean you’ll get good coverage customised to your needs.
- Low-cost Life Insurance: Low-cost life insurance policies may look on comparison sites to be inexpensive, but the monthly premiums will rise with time.
- Policy Premiums: Policy premiums are only guaranteed for a few years (usually the first five or ten years), after which they are re-priced.
- Pre-existing Medical Conditions: You should still be able to get life insurance, but it will be more challenging to find and more expensive. Information on specialist life insurance companies should be available to relevant organisations.
- Online Life Insurance Brokers: Since they pay you some or all of the commission they collect from insurers, online insurance brokers may be able to provide lower costs.
I hope you get a complete idea of life insurance. If you are looking for a life insurance advisor, you must visit Mountview Financial Solutions in Purfleet (RM19) for better life insurance and mortgage advice.