What is life insurance? Learn about two types of life insurance-
Not everyone needs to have life insurance. But if your children, spouse, or other family members are dependent on your income for survival, then you need life insurance. It will help provide for your family after your death.
What is life insurance?
A life insurance policy is basically a type of agreement with an insurance company. Premium payment
In return, the insurance company pays a lump sum payment known as ‘Death Benefit’. This payment can be borne by the insured’s family after his death.
Life insurance will protect you and your family from future risks. And it will provide for your family’s future expenses after your retirement or death. In that case, life insurance is a long term investment.
The amount of insurance paid will depend on the insurance category you purchase. Moreover, you can decide how the money will be spent, or whether it will be applied to a specific case (mortgage, rent).
The amount of money you have to pay for life insurance depends on a number of factors. Such as how much money you want to keep for the family or how long the life insurance policy lasts. It even depends on your age, health, and lifestyle.
Life insurance can be of different types. Usually, the individual chooses life insurance based on his needs and objectives. Let’s not know about the two common types of life insurance.
Term life insurance (term life)
insurance): This type of insurance is conducted for a certain period of time such as 5, 10, or 25 years. This insurance is less expensive than permanent life insurance. This insurance can be used as an alternative to your lost potential income. And it will help you meet your family’s financial goals, such as paying off mortgages, running a business, and paying for education. Keep in mind, however, that although this insurance is referred to as a potential income option, it only pays a one-time fee. The advantage of term life insurance is that once your family is financially self-sufficient, you do not have to spend money on insurance.
- Life insurance (whole life insurance):
Life insurance is a type of permanent life insurance. There is no fixed term for this insurance. Life insurance is more expensive than term insurance. Here the insured has to pay a life insurance premium. After the death of the insured person, his family will be able to enjoy a certain amount of money mentioned in the insurance policy.
So now think, what insurance, what amount to do for your family’s future financial security.