Basics of Life Insurance – A Necessity In Today’s World

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Life insurance is a step that you take to ensure your family’s financial security at the time of your untimely demise or eventual death. A loss in a family is a devastating period where coping up mentally, emotionally and financially is required. By opting for life insurance cover you can be assured that an amount would be paid to your family on the whole or monthly depending on the kind of insurance you have chosen for at the time of your death.

Selecting the kind of life insurance which will leave you well assured is always a tough decision

Choosing a life insurance is a tough decision which gets complicated due to the availability of different kinds of life insurances where each has its own set of pros and cons has. Thus choosing a policy where the pros are often outweighed is important. Term life insurance, universal life insurance, life insurance and equity index life insurance are the common and basic kinds of life insurance. These are the short term and long term insurances where many find long term insurance preferable as it involves no renewal or reapplication for the insurance policy.

The different kinds of life insurance policies in brief

Term life insurance requires you to pay premium for a fixed period or term and after this term you can continue with the premium that increases annually. This kind is useful if you have a fixed budget where the premiums will be fixed. However it does not provide you with any cash value.

Universal life insurance offers a cash value and is flexible in terms of the premiums that you can pay every month. This is useful if your income varies month after month. All you have to do is pay sufficient amount as premium which is just right to keep your policy in effect and valid. This is an investment based policy where the premium amount is invested in either bonds, mutual funds, stocks or other investments. Thus this kind of insurance is subject to market risk.

Life insurance is the right kind of insurance for you?

Life insurance as the name suggests covers you for your entire life and is a long term investment. It offers guaranteed death benefits and also cash value which is free from tax. Though it is expensive, it may pay you dividends as well. 

Another form of life insurance is the equity index life insurance which consists of taking up a part of the premium that you pay for investments where your earnings are tied to a market index. This has the potential for long term as it does not tie to the stock market.

Guaranteed death benefits and fixed premiums that are tax deferred makes life insurance the right insurance for you that also accumulates on the cash value benefiting your family. Thus it is a kind of insurance that offers savings along with protection.

Tips for finding the affordable life insurance with lowest rates

Non-participating life insurance is an affordable life insurance as these plans have a fixed premium which can be determined based on your budget. Premium that you pay is an important factor determining the affordability of the insurance policy thus by selecting the premium amount you are comfortable with you can opt for the preferred life insurance .

Rather than sticking on to a single company look out for other reliable companies offering life insurance. Compare the rates of all the companies as the rates vary from one company to company. Read the policy related documents of all the companies and select the one that is suitable for your budget. There are numerous online sites that will help you compare different companies for the life insurance quotes and help you to choose the best suiting your pockets.

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