As we know that Today’s life is getting more difficult due to higher inflation rate.People are struggling hard to meet their needs.They don’t have any backup for their families if they dead.To overcome these type of situations Life insurances are introduced so that a common man can save money for his wife and childrens or thier other family members if something happens to him.
Here’s an article on life insurance in which we will discuss what is life insurance and it’s two most common types. so that you’ll be able to know about it’s importance and can use it for yourself. If you want to know about the basics of the life insurance then read the full article which is below.
A life insurance policy is an agreement between a person and insurance company. In life insurance policy Insurer (a person who take the life insurance) pays a collection of money to the insurance company on one or more named beneficiaries and when insurer dies the insurance company guarantees the exchange for premiums paid by the policyholder after thier death.
The beneficiaries can use the money for whatever purpose they choose. it can include paying everyday bills, paying a house or putting a child through college. Having the life insurance can ensure that your family can stay in their home and pay for the things that you planned for.
There are two basic types of life insurance:
- A Term life policy
- Permanent Life Policy
A term Life Policy:
A term life policy can purchased for a specific period such as 1, 5, 10, years and maximum 30 years. Coverage expires when that period ends and a payout only happens if the insurer death occurs during that specific period. If the insured person outlives the original policy period, coverage can be renew but the premiums may be higher.
A term life policy is less expensive and if you have low budget salary then you can purchase this type of insurance easily. Further term life policy is very flexible you can purchase it for different time durations.but there is no cash value in a term life insurance policy.
Permanent Life Policy:
Permanent life policy is also called life insurance policy.there is cash value in life insurance and it provide coverage for the insured person’s lifetime as long as premium payments are in good condition. Premiums can be higher than for term life policies.
The beneficiary of a permanent life policy receives a guaranteed death benefit when the policyholder passes away. In most cases it’s tax free. A permanent life insurance policy can build cash value that Policy holder can withdraw during their lifetime.
Importance of life insurance:
It is wise to purchase a life insurance. Any person with financial dependents will find the benefits of buying life insurance attractive. In case of the demise of the only income earner, a life insurance policy becomes a financial safety that helps your loved ones to pay for their expenses such as a loan, childcare, education, health, and many other everyday bills.