Life insurance is a way to protect your family in case you die earlier than expected. It gives you peace of mind because you know that your family will be provided with the financial resources they will need when you are no longer around to bring income into the house. Your family will be able to live their lives in the lifestyle they are accustomed to, and they will have the money available for your funeral and burial costs.
This insurance is for almost everyone. If you have a spouse or a family, then you need it now. If you own your own business and want to keep that business intact after your death, this insurance can help with that as well. If you have money that you currently keep in a savings account that isn’t earning a lot of interest, you may want to check into investing that money into an insurance product to earn a better rate of return over time.
How does life insurance work? The basic premise behind this insurance is that you pay a monthly or annual premium for a specific type of policy to provide financial protection upon your death. You choose the death benefit amount that you need based on your income or your future needs. Upon your death, the death benefit will be paid directly to your named beneficiary or beneficiaries. The beneficiary can use the money in whatever ways he/she sees fit.
There are different types of coverage. You can buy a term life policy, which is the cheapest policy available. If you die during the term of the policy, the death benefit is paid to the beneficiary. If you are still alive at the end of the term, the policy expires. You can buy a whole life policy in which you pay for a policy for life, but it will pay upon your death no matter when the death occurs. You can also buy a universal policy which allows you more flexibility in terms of premium and death benefit.
The major benefits are that your family is protected in case of your untimely death. You can also withdraw money or borrow money from some types of policies. Finally, the policy can be used as collateral for a loan.