my investment wiki - Blog Directory OnToplist.com Protected by Copyscape Why You Need Life Insurance for You and Your Family ~ MY INVESTMENT WIKI

Why You Need Life Insurance for You and Your Family

Many people today have ignored the fact that they need to have life insurance for them and every member of their family. The world we have are living today is so unpredictable that there is an increase in the dead rate. Dying today and not having a life insurance might be bad for you and your family members. Although we do not plan on dying anytime soon, as they say, “dead is evitable, ” and we should plan ahead in case it finally comes. Having a life insurance would help your family or anybody depending on you ease the burden that comes once you are gone. Let’s say, for instance, Paul got married , had two little kids and then two years later died in an auto crash. Paul died leaving a family of three behind to cater for themselves. Imagine a single mother taking care  two young kids alone. This is a huge burden. Here we are assuming Paul died without a life insurance. On the other hand, let’s assume Paul has a life insurance; it would come in handy as the claim from Paul life insurance can help alleviate the burden placed on his wife. This is just a simple illustration that is trying to use to explain the importance of life insurance.

What is a life insurance?
Before we talk about the importance of life insurance, first we should get a firm understanding of what life insurance is. So what then is a life insurance? It is simply a kind of security or protection from financial loss that may occur due to an untimely death. That is, it is a contract between an insurance company and an insurance policy holder in which the insurance company agrees to pay to a beneficiary a stipulated sum in exchange for a premium, In the case of the dead of an insured. In some cases, as maybe stipulated in the contract, events like illness can also cause the insurance company to make payment. Premium payment is usually made by the policy holder. The beneficiary in the contract receives the financial proceedings upon the dead of the insured; hence he or she is protected from the financial implications of the death of the insured.
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Components of life insurance contract

Dead Benefit : this part of the contract specify the total sum of money that the insured’s dependents or beneficiaries will get from the insurance company upon the death of the insured. This benefit amount is usually decided by the insured, but the insurance company must decide whether the insured is eligible for the coverage based on the written contract.

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Premium Payment:  the insurance company decides the amount of premium that is needed to cover mortality costs, using real life-based stats. There are certain factors that are considered when determining risk. Such factors include the personal medical history of the insured, the age of the insured, and the lifestyle of the insured. So long as the premium is been paid by the policy holder as stipulated in the contract, then the insurance company is under obligation to pay the death benefit.

Cash Value: this component of life insurance contract is only included in a permanent life insurance contract. It has two functions; it acts as a form of savings account that gives the insured the chance to amass capital that can use for anything when the insured is not dead yet. Its another function is that it is used by the insurance company to alleviate it’s risk. The more the cash value keep growing, the more the amount that the insurance company is at risk for the entire death benefit reduces, this is how insurance companies are able to charge a fixed level premium.

Classes and Subclasses Of Life Insurance
There are two main classes of life insurance; they are temporary and permanently. And there are four subclasses of life insurance. They are the term, universal. Whole life and endowment. We are not going to talk about the subclasses in this post as that is a post for another day. Here we are only going to take a look at the two main classes of life insurance.

Temporary Life Insurance:  this is a kind of insurance plan that provides insurance on one’s life for a given period of time. In this kind of life insurance, the policy won’t amass cash value. This is a short term insurance and relatively cost less than the permanent policy and increases with an increase in age of the insured.

Permanent life insurance: this class of life insurance acts as coverage for the entire lifespan of the insured. This insurance policy amasses cash value until the day it will mature. The money can be withdrawn by the owner; he or she can even borrow it or even surrender the policy and in turn get the surrendered value.

Why you need life insurance

Ø Getting a life insurance can help take care of the cost of funeral and burial in case of your dead. Although no one wants to die, it still happens anyway. Dying without having your life insured can cause your wife, children, and another family member to have to go through the stress of raising money for funeral and burial which will put pressure on them financially.

Ø In the case of your dead, your family would likely need money to pay off some debt you might have own before your dead. With the money from your life insurance available, they won’t have to sell off some or all of your properties to settle debts.

Ø With a good life insurance, your children’s tuition fees and other needs including feeding will be taken care of and thus they won’t have to endure hardship after your demise. We all know every parent want the best life for their children.

Ø Imagine if instead of you dying first, your wife died first, if you bought a life insurance for her while she was alive, the money recover from her insurance can also go a long way in helping you raise the kids and even engage the service of a house help who would then serve as a replacement for your wife in the life of your kids.

Ø Also in case any member of the family dies, their life insurance can cover and take care of their funeral and burial expenses hence you don’t have to spend money from your pocket to fund the burial.

These are some of the many reasons why you need a life insurance for yourself and every member of your family. You can do a simple Google search, and you will get numerous companies that offer life insurance plan near you. Get one for yourself and your family members today. Feel free to contact me if you have questions or you can leave a comment. 

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