Understanding Life Insurance Plan: Key Concepts For Consumers

By Author: Kirthy Shetty
Total Articles: 598
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What do you consider as an investment? Is it a nice car? A beautiful home? Loads of money? In this day and age, let's be honest, those seem to be practical investments. How about we add another aspect: security. All those things can be taken away from you, so how about you protect them for the sake of your family? This is what life insurance aims to offer.

A life insurance plan is a policy that generally provides benefits to the policy holder's beneficiary when the person dies. It sounds very reasonable but then again, it is not for everybody.

Is it for you?

When you look at it, this insurance plan seems to be fitting for all. It is not always the case. Sometimes, getting a different financial product is more practical. Let us say you own a house and your car is paid already. You might not really benefit from this kind of insurance unless you have a family. Then again, before you make a decision, it is important to know the different kinds of life insurance products.

Term vs. permanent

Life insurance can either be term or permanent. Term life insurance is a temporary security that is offered ...
... normally from a period of 15-30 years. It is a very cheap plan and it consists of providing insurance benefits to the beneficiaries if the person dies within the scope of the term. So if the person dies on the 14th or 24th year, the full insurance benefit will be provided as long as the death is within the term. Permanent life insurance or universal is costly and it offers not only insurance but also a savings program. The insurance company takes into account the condition and the risks that the policyholder has. Younger individuals will have the savings prioritized compared to the insurance. As the person grows older, the insurance becomes a bigger priority. This is advantageous especially with the saving since the money can be accessed in the future and can be used for different purposes.

Single vs. joint

There is also the debate about single and joint policies. Single is the simplest one and it is a policy for 1 person and provides benefits when the person dies. When it comes to joint, it is between 2 people, often times, couples and the death benefit can come on the first death or the second death. There is another option, dual policies that provides the benefits only after the last surviving policyholder dies and is geared towards providing benefits for the beneficiaries.

Things to consider

You have to consider the cost of the insurance. It should fit well within your lifestyle and you must also consider possible beneficiaries. You can put the insurance to your mortgage and that means the benefits will pay off the mortgage, securing the home and your family. It is a big topic, life insurance so before making a final decision, do your research and ask for expert advice.

Kirthy Shetty, Ezine Articles Expert Author.For more information: Investment in Insurance
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