A life insurance policy is a legal contract between you and an insurance company. When you buy a policy, you name a beneficiary and the insurance company pays out the death benefit upon your death. There are two types of beneficiaries, primary beneficiaries and contingent beneficiaries. When naming a beneficiary, you should use the legal name of the person. In cases where the beneficiary is a second spouse, you should use the legal name of the second spouse rather than “husband.” The name “husband” may be interpreted as the first husband at the time you purchased the policy and may not be correct.
Some policies have cash values that accumulate over time. These cash values can be accessed under certain circumstances and through certain procedures. You can use the cash value to pay off bills or buy another type of insurance, such as an annuity. If you die before the time you are supposed to die, the policy may be reinstated, but the death benefit will be less.
If you have a preexisting condition, make sure you choose an insurer that will not deny your insurance or charge you exorbitant rates. You should read the policy documents carefully to know which risks are covered and which are not. Purchasing the right amount of life insurance is important to provide for your family’s needs in case of death.
Some people do not need life insurance at all. This is true if you’re married with no children and earn a high income. However, you should consider the impact of your death on your spouse’s income, lifestyle and other financial commitments. For example, you may want to purchase a moderate-sized policy when your child is still young. This can protect the future financial insurability of your child and provide financial resources to your spouse in the event of your death.
A life insurance policy is a legal contract between you and the insurance company. If you die, the insurance company pays the death benefit to your beneficiaries. These beneficiaries can then use the money to cover their bills, pay off a mortgage, fund college, and save for retirement. If you die unexpectedly, life insurance is a great way to ensure that your family is financially stable and secure.
In the United States, life insurance was first sold to the public in the 1760s. Presbyterian Synods and Episcopal priests in Philadelphia formed the Corporation for Relief of Poor. Over the next three centuries, more than two dozen companies started providing life insurance to the public. In 1787, James Dodson, a mathematician and actuary, tried to start a new life insurance company to cover the risks of long-term life assurance policies. However, he was refused membership in the Amicable Life Assurance Society because of his age. He later tried to secure a government charter for his company.
When purchasing life insurance, consider the benefits and disadvantages of each type. Some policies have higher fees and lower death benefits, but their cash value may still be useful for retirement income. These policies may be worth considering if you have already maxed out other tax-advantaged accounts.