The Basics of Life Insurance

Life Insurance

There are many reasons to purchase Life Insurance. A one-year term is great if you’re new to the market and need a temporary policy. A ten-year term is a good choice for supplementing another policy or if you’re nearing retirement or have tight finances. A twenty-year term is a good choice if you’re planning to start a family or want to provide financial protection for your children until they reach adulthood.

A policy has a named beneficiary who will receive the proceeds of the policy upon the insured’s death. The beneficiary is not a party to the policy, but is paid directly from the policy owner if the insured person dies. The owner can change the beneficiary, but changing it after the policy term is up isn’t an option. However, if the original beneficiary changes his or her mind and decides to die before the policy expires, the new beneficiary will have to agree to the change.

In order to claim a life insurance benefit, the beneficiary must submit a certified copy of the deceased person’s death certificate. Some insurers will skip the medical exam altogether, while others will use a traditional underwriting process that can take several months. The benefit is paid after the insured person dies, and you can choose which percentage of the death benefit to pay to your beneficiaries. Adding contingent beneficiaries to your policy is also a good idea.

Some occupations and hobbies can increase the risk of death for policyholders. Truck drivers, construction workers, and law enforcement officers face an increased risk of death than other types of occupations. Even hobbies like skydiving and scuba diving can increase the chances of death and therefore your premiums. You may not even be aware of your risk before obtaining a policy. Once you’ve determined your risk profile, it’s time to shop around for a policy.

Universal life insurance is a versatile option that provides the same protection as whole life insurance. You can also make changes to your policy if your needs change, and you can borrow against your policy if you need to. In general, whole life insurance is more expensive than term life insurance, but it can provide additional benefits, such as the ability to borrow against it or withdraw cash value. However, whole life insurance policies are more expensive than term life insurance, so they may be the best option for those who want a savings element and are not in a hurry to take out a policy.

The age of the policyholder is a significant factor in determining the cost of a life insurance policy. Older people are deemed to be higher risks, so life insurance rates tend to be higher for older individuals. Also, men are likely to pay more for life insurance than women due to their shorter life spans. Smokers, however, will always be subject to a higher premium than non-smokers. And weight is another factor that affects life insurance premiums.