Life insurance is a type of insurance that pays a certain amount of money to the beneficiaries of a person the insurance covers following their demise. Alternatively, this payment could be made after the set contractual period is done. This policy works to ensure that the insured person’s beneficiaries’ needs are catered for even after his passing. Which is of course done indirectly through the provision of money. This money is cumulative of premiums paid by the insured to the company covering him or her.
The components
Premium
This is the payment made to an insurance company by the person it ensures. It could be made on a monthly basis or after certain periods of time depending on an individual’s contractual agreement with their company. The amount is usually deliberated depending on several factors; mostly statistical. Other common considerations are the insured’s medical history, place of work and its accompanying dangers and age. As long as this premium is paid as agreed upon until his or her death, the insured will receive what is owed.
Death benefit
It is the amount of money the insurance company agrees to pay to the insured or the insured’s family upon his or her passing. This is what set grounds for the amount moneywise of the premium payments that will be made. The amount received as the death benefit is determined by the insured but as stated earlier has to be agreed upon by the insurance company. This is due to the fact that there are certain requirements for the amount of death benefit that these companies require potential clients to meet. One of these being the interest the company plans to garner from the venture.
Characteristics of a good life insurance
Ability to increase cover
This allows one to be more flexible. Flexibility would be required in changing circumstances of the insured’s life. For instance, having children or getting married.
A policy that includes child death cover
This insures the child against death and traumatic events. For instance, if the insured dies leaving the child, the child will be psychologically affected and might require therapy. Such services may not be available to the child due to the family’s financial constrictions. Having such a policy will ensure the children of the deceased are catered for.
The ability to waive premiums
If one is unemployed or experiencing financial hardships, they would want to be able to waive their premiums until they are able to pay them.
Benefits in cases of terminal illness
If one is diagnosed with terminal illness, such a guarantee would cater for the remaining life of the insured before they die. This range from depending on the policy, catering for hospital bills to living in a hospice.
Insuring your family’s future is the best gift you could ever give them. No one knows what could happen in their future but this is one way to ensure your family stays financially protected. If you are ready to take care of your family, contact us and talk to one of our agents.