Life insurance premiums depend on a number of factors. Generally speaking, healthier people will pay lower rates than unhealthy people. Health-related factors include pre-existing conditions and certain health metrics. Also, life insurance for men has historically been higher than that for women, due to the fact that men generally live shorter lives. While this is a factor in some cases, it is not always the case. A policyholder can request a change in risk class to get lower premiums.
The name of the person responsible for paying the policy and the person who will receive the proceeds of the policy are called the owner and the insured, respectively. The owner and insured may be the same person; for example, “Joe” is both the owner and the insured. However, in cases of second marriages, the legal name of the man should be used instead of “husband”. This would avoid confusion, as the term could mean both the original and current husband.
Most life insurance policies build cash values over time. These values can be borrowed by the policyholder or a beneficiary and used as collateral for a loan. While the interest on the loan will go back into the cash value account, policyholders may have to pay off the loan with a portion of the death benefit. In some cases, policies may also have a grace period, where the policyholder can pay back a portion of the premiums and the balance.
Suicide clauses will nullify a life insurance policy if the insured dies within a certain period of time. Most states in the US stipulate a maximum contestability period. If the insured dies within this time period, insurers can contest the claim and request more information. But this is not always possible. Rather, insurers may deny a claim if they believe there is a misrepresentation in the policy.
Other reasons to purchase life insurance include those who may have dependents or who need the money. Adult children who are caring for aging parents may need the money to pay for their education or debt. Married couples or engaged couples who have a joint mortgage may also need a policy to cover their costs. If an individual dies unexpectedly, life insurance coverage can help pay off debt and provide for the next generation. It can also protect the family from unexpected expenses.
The sale of life insurance in the United States began in the 1760s. Episcopal priests and Presbyterian Synods in Philadelphia established a Corporation for Relief of Poor in 1769. Between 1787 and 1837, more than two dozen life insurance companies were established, with only half of them surviving. In 1837, the Army Mutual Aid Association and the Navy Mutual Aid Association were founded. Both were influenced by events such as the Little Big Horn massacre and sailors drowning in the Pacific.
If you are married and have no children, there is no need for life insurance. Your spouse may have a high income or not need much financial support. Also, consider the lifestyle you would like to live and any outstanding debts you want to cover with your life insurance policy. If you are not married, you may not need life insurance at all. But, if you have dependent children, life insurance for them can help with your funeral expenses. You can also get a group policy if you are in an employer’s pension plan.