Opinion

Why Opting for a Life Insurance Policy Should be Taken Seriously

life insurance policy - cfamedia

During and post-COVID-19, the importance of life insurance cannot be overemphasized.

For some reasons, however, a lot of people still do not see the extent to which opting for a life insurance policy is important and why they should be taking it seriously.

Life Insurance and Types

A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries, upon the insured’s death.

These are some of the more common types of life insurance:

Term Life Insurance

This is designed to provide financial protection for a specific period of time, such as, 10 or 20 years.

With traditional term insurance, the premium payment amount stays the same for the coverage period you select.

After that period, policies may offer continued coverage, usually, at a substantially higher premium payment rate.

Term life insurance is, generally, less expensive than permanent life insurance.

Universal Life Insurance

This type of insurance is a form of permanent life insurance, designed to provide lifetime coverage.

Unlike whole life insurance, universal life insurance policies are flexible and may allow you to raise, or lower your premium payment, or coverage amounts throughout your lifetime.

Whole Life Insurance

This is a type of permanent life insurance, designed to provide lifetime coverage.

Due to the lifetime coverage period, whole life usually, has higher premium payments, than term life.

Policy premium payments are typically fixed and unlike term, whole life has a cash value, which functions as a savings component and may accumulate, tax-deferred, over time.

Benefits of Life Insurance

Whether Whole, or Term life insurance, their benefits are super important and should not be easily overlooked.

Life insurance, even though a sensitive topic, can help provide a more secure financial future for you, your family and loved ones, should the unexpected happen.

Here are some benefits:

Offsetting Debts

Life insurance benefits can help replace your income, if you pass away.

This means that your beneficiaries could use the money to help cover essential expenses, such as paying for a mortgage, or college tuition for your children.

It can, also, be used to pay off debt, for something as serious as an outstanding car loan, or as simple as your credit card bills.

Paying Financial Costs

Life insurance policy benefits can be used to help pay for final expenses after you pass away.

This may include funeral, or cremation costs, medical bills not covered by health insurance, estate settlement costs and other unpaid obligations.

Inheritance

Some people purchase life insurance, with the intention of leaving the death benefits as an inheritance to their loved ones.

Tax Free

Since payouts are generally tax free, your beneficiaries do not have to worry about looking for extra money for, tax before getting paid.

You Should Get Life Insurance:

If you have kids

Considering the cost of getting kids through school years, your life insurance payout can cover the expenses that come with growing up.

This could, also, be helpful for parents with dependent children, due to health reasons.

This is a way to ensure that they are cared for, even, after you are gone.

If you have debts or own property

Your debts will not go away, when you die. Your family will be responsible for paying up any debt you leave behind.

With life insurance, your debts are covered, and your family saved, from the burden of such payments.

If you take care of people

As a breadwinner, the loss of your income could be devastating, but with a life insurance policy, you can ensure that your loved ones are taken care of, if you die or become disabled.

While life insurance is designed to offer your loved ones a sense of financial security, when you are gone, you can still benefit from it, while you are still alive.

Contacting an insurance agent can help you better understand the types of life insurance policy fits your needs.


Featured Image: compoundingpennies


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About the author

Sylvia Eguzoro

A graduate of Philosophy looking to delve into the world of business and technology.

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