Life insurance is something that many of us have heard about, but few of us actually understand what it is. Have you ever wondered what might happen to your loved ones who are financially dependent on you, if you suddenly had a terrible accident or illness and you passed away? Financially they would be in real trouble as the main breadwinner of the family would be gone, yet there would still be a mountain of bills to pay. What life insurance can offer is a payout upon the passing of the policyholder provided that they paid their premiums throughout the policy’s life. This is just a definition of life insurance in its rawest terms, so if you would like to read a comprehensive guide, then read on about how to maximize your life insurance.
What is Life Insurance?
Life insurance is a legally binding contract between a policyholder and an insurance company that guarantees a payout upon the death of the policyholder. The idea is that if premiums are paid throughout the lifetime of the policy, then payment will be made to any named beneficiaries, normally a spouse or children, so that they are financially stable after the policyholder’s death. Obviously, you should do your research before investing in such a policy because you need to ensure that the company that you take out the policy with is financially solvent, it is no good if they are a disreputable insurer as there will be nothing to pay out if they are bankrupt!
Difference between Accident and Life Insurance
Some people already have accident insurance, and they may be thinking, why do I need another form of insurance? Well, look at it this way, say you were injured in a car accident in Georgia, and if you have accident insurance, then this will payout and cover the cost of hospital treatment and loss of earnings. But, if you were killed in the accident your family would receive nothing, and they would run the risk of being destitute. Professionals from a Norcross personal injury law firm advise that life insurance is one of the most worthwhile insurance policies to take out if you want to protect your family in the long run, but that it is also merits taking out accident insurance as a double safeguard in case you have an injury. Of course, you can always try and sue the responsible party, but often the courts decide against you, so it is better to be safe than sorry.
Who is it Suitable for?
Life insurance is suitable for anyone who is the main breadwinner in their family and is worried about their future. If you are single and without children in your 60s, then there is little point taking it out as you have no dependents to worry about so it will be a waste of money, but for parents of a young child; it or severely disabled adult children who will need lifelong care, it is a must. If you own property with a partner, it makes sense to take out life insurance because if you die, they will struggle to pay the mortgage, and you wouldn’t want them to lose their home. It is also suitable for young people because the insurance premiums will be incredibly low and will be locked in for life. So, rather than paying higher premiums later in life, lock in an affordable monthly amount whilst you’re young and you will then provide for any future offspring that you may have.
How Does it Work?
As we mentioned, you will pay a monthly premium into your policy that will be dependent on many factors such as your age when the policy is taken out, your health, and your lifestyle. Based on this and your premium, a death benefit will be calculated, which will be the guaranteed payout upon the policyholder’s death. There is also a cash value throughout the policy that can do one of two things: it can be used as a savings pot throughout the insured’s life or used to pay premiums or purchase extra insurance type.
As we have discovered, life insurance is a type of insurance that will pay out to named beneficiaries upon the insured’s death. It is not to be confused with injury insurance that will only pay out against an injury and not death. It is suitable for anyone who has loved ones that they want to look after, after they pass away, and is also a great way of saving during your lifetime so that you can purchase one-off needs or pay for additional insurance as necessary. So, do the right thing and safeguard your family’s future whilst you can.