What Is Life Insurance?
If you do not know what life insurance is, it is time to find out. Life insurance is quite simply a financial investment that you cannot do without! If you contribute to a household, or if there is anyone dependant on your financial contribution, then it is imperative that you have the measures in place to ensure that they will not be left in unfortunate standings when you have passed away.
So what is life insurance? Life insurance is an annuity policy, whereby you pay a set premium every month, specify your beneficiaries, and then when you pass away your specified beneficiaries are paid out a lump sum. The amount of money that is paid out is fully dependant on how much you can afford to pay for your monthly life insurance premium. The cost of your premium in relation to your payout amount is all dependant on your risk profile. Your risk profile is calculated on a number of factors, including your age, gender, your health history, and your current lifestyle. Your age contributes to your premium because the younger you are, the lower your premium will be. Your health history is very important, as well as the history of genetic diseases in your family. In this way the insurance company will be able to tell whether or not you are likely to live to an old age or not, and whether you will acquire a genetic illness. It is very important that you are very honest in answering all the questions for your policy, as any discrepancies could be discovered after your passing. This in turn will give the life insurance company the right to not pay out.
There are two options available to you as a new life insurance policyholder. Firstly, you can take out term life insurance, which is the cheaper premium policy. Term life insurance is for a specified number of years, and is usually taken out by people during their working life. A whole life insurance policy is in effect until the policyholder has passed away. This naturally makes it the more expensive type of policy, but also the more thorough.