Life insurance is a type of insurance that pays out benefits after the insured person dies. It may also be paid out after a certain amount of time. Many people are told that they need life insurance. However, before you get life insurance, there are essential things that you should know about it.
You Need Life Insurance if You Have Dependents
Life insurance is a necessity if you have a spouse, children or anyone who is dependent on your income. If you are financially-independent and no one will financially suffer if you die, then you probably not need life insurance.
Life Insurance is a Contract
Life insurance is a policy, or contract. It is a contract between the insured person and the insurance company. The insured person will pay a premium. After the insured person dies, the benefits will be paid out to the beneficiaries.
Life Insurance is not an Investment
Many people look at life insurance as an investment. However, it is a risk-management tool. If you are looking for an investment, then there are better options.
There are Two Main Types of Life Insurance
Term life and permanent life insurance are the two main types of insurance. Term life is the least expensive option. The policies will typically last 10 to 30 years. You will not be able to cash out benefits after the policies expire. That is why it is possible for you to pay for term life and never get anything out of it.
Permanent life insurance is more expensive than term life. However, this form of insurance is for life.
Life Insurance can be Expensive or Inexpensive
Some factors affect the cost of life insurance. It can be expensive or inexpensive. Young, healthy people typically have the lowest premiums. For example, a healthy 30-year-old who does not smoke will pay less than a 50-year-old who smokes.
You Have to be Careful When Cancelling A Policy
Many people find that the policy that they have does not work for them, so they cancel it. However, you want to make sure that you read the fine print before you cancel it.
You may have a health problem that makes it difficult for you to get a new policy. You may also lose money if you have a permanent life policy with a cash value.