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Life Insurance – All You Need To Know

by pps-DUEditor

Life insurance is a powerful financial tool that provides financial security to your dependents if you were to suddenly pass away. The payout offered by the policy will help your loved ones pay for funeral expenses and take care of their future living expenses. Read on to know more about life insurance.

When Should You Get Life Insurance?

If you have dependents or a mortgage or other types of debts, you should buy a life insurance policy with a large enough payout. If you are single and don’t have any financial commitments, you may not necessarily need a life insurance policy. But, it’s still a good idea to get at least a small policy that you can upgrade later.

How Much Coverage Do You Need?

The amount of coverage you need to opt for will depend on the purpose for which you are buying a life insurance policy. For instance, if you don’t have any family that is financially dependent on you but you have a mortgage, you’ll want your policy to at least cover the outstanding loan amount.

Types of Life Insurance Policies

Life insurance can broadly be classified into two types – term life insurance and permanent life insurance. Term insurance policies offer coverage typically for a period between 5 and 30 years. During the covered period, your beneficiary will receive a payout if you pass away. If you survive the coverage period, no one gets paid.  Term insurance policies are relatively inexpensive.

Permanent life insurance policies, in comparison, cover you until your death, provided you pay the due premiums. These policies accumulate a cash value, which you can borrow against or make withdrawals from. You can also redeem most of it if you surrender your policy. Due to this, permanent life insurance is more expensive than term insurance.

How Much Does Life Insurance Cost?

The cost of a life insurance policy can vary widely based on the type of policy you purchase, your age at the time of buying the policy, and your health conditions, among other things. Regardless of these factors, ensure that you compare different policies and their pricing before you zero in on a particular life insurance policy.

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