Life Insurance Overview

If you are the sole or the main income earner in your family, you would always want your family to live financially worry free even if you happen to be no more. Life insurance can help you achieve that.

 

Normally, families have to have the following expenses regardless of anything else:

  • Grocery and food expenses

  • Clothing

  • Education (school and college expenses)

  • Mortgage payments.

The above are some of the important standing payments that are required for a family to survive.

 

We all want that the life insurances would never be used, because none of us want to die. However, the world does not go like that. There is nothing more uncertain than life. It can change in a fraction of a second and if adequate planning has not been done, the survivors in your family can be emotionally as well as financially devastated. Coping with the sheer loss of the family member is difficult enough. The burden to start generating income can add to unsurmountable pain in the whole family. Therefore, if you have someone who can be your survivors, get the life insurance and the peace of mind today.

 

There are two main types of life insurances: Term Life Insurance and Permanent Life Insurance.

 

Term Life Insurance is designed to provide protection for a certain number of years like 10 or 20 or more years. If you need protection for your survivors for a certain number of years only, after which you think they can become self sufficient, a term life insurance is a very affordable way to buy the peace of mind we talked about above.

 

Advantages of Term Life Insurance

 

  • Term life insurance premiums are low.

  • You can buy term life insurance for shorter durations as per your need.

 

Disadvantages of Term Life Insurance

  • There is no cash value at the end of the term. Just like living in an apartment, as long as you pay the monthly rent, you have the apartment to live for the duration of the lease. At the end of the lease you do not own any part of the apartment.

  • Getting term life insurance policy becomes very costly with age. If you think you might need to buy an extension later on, it is better to buy a longer term policy when you are younger.

 

 

Permanent Life Insurance

  • As the name suggests, the benefits of the permanent life insurance are for the whole life.

  • Since permanent life insurance is like an investment, you can have an accumulated cash value besides just the death benefit.

  • Permanent life policy can be used to get monthly payments during your retirement, depending upon how many premiums have been paid.

  • Taking the example of a home from above, you can think a permanent life insurance as buying a rent to own home. You start paying monthly rent and after a certain number of years you own the house and can live in it forever without having to make any more payments.

 

Disadvantages of Permanent Life Insurance

  • Costlier than term life

  • Some people may find it a little complex to understand the various options available and may not be able to take advantage of all of them.