Life insurance is a contract between an insurance company and a policyholder, where the policyholder pays premiums to the insurer in exchange for a death benefit that is paid out to designated beneficiaries upon the death of the insured person. The main purpose of life insurance is to provide financial security for loved ones in the event of the policyholder’s unexpected death. Today, we at InsureWise would like to discuss the basics of life insurance to help you better understand it.
Types of Life Insurance Policies
There are different types of life insurance policies, but they generally fall into two categories: term life insurance and permanent life insurance.
Term Life Insurance. Term life insurance provides coverage for a specific period of time, such as 10, 20, or 30 years. If the policyholder dies during the term, the beneficiaries receive the death benefit. If the policyholder outlives the term, the coverage ends and there is no payout.
Permanent Life Insurance. Permanent life insurance, on the other hand, provides coverage for the policyholder’s entire life, as long as premiums are paid. Permanent life insurance policies also have a cash value component that accumulates over time, which can be borrowed against or used to pay premiums.
Basics of Life Insurance
The amount of life insurance coverage a person needs depends on their individual circumstances, such as their age, income, debts, and number of dependents. As a general rule, experts recommend that a person should have life insurance coverage that is equal to at least 10 times their annual income. When purchasing life insurance, it’s important to shop around and compare policies from different insurers to find the best coverage at the most affordable price. Factors that can affect the cost of life insurance premiums include age, health, lifestyle habits (such as smoking), and the type and amount of coverage. It’s also important to understand the terms and conditions of the life insurance policy before signing up. For example, some policies may have exclusions for certain types of deaths, such as suicide or death resulting from illegal activities. There may also be limitations on the death benefit payout, such as a maximum amount or a specific payout structure (such as a lump sum or monthly payments).
Common Life Insurance Myths
One common misconception about life insurance is that it’s only necessary for married people or those with children. However, even single people can benefit from having life insurance if they have debts or other financial obligations that would need to be paid off in the event of their death. Another misconception is that life insurance is only necessary for older people. In reality, it’s important for anyone who has loved ones who depend on them financially, regardless of age or health status.
Life Insurance Policies & More in Las Vegas, Henderson, Reno, North Las Vegas, Summerlin, Paradise, Spring Valley, Sunrise Manor, Enterprise, Sparks, Carson City & State of Nevada
Life insurance is an important tool for providing financial security for loved ones in the event of an unexpected death. By understanding the different types of policies available, the factors that can affect premiums, and the terms and conditions of the policy, individuals can make informed decisions about purchasing life insurance coverage that meets their individual needs. If you are interested in life insurance, call InsureWise or fill out this quick and easy quote form and let us take care of you!