The Best Policies For Protecting Family Members In Case Of an Unfortunate Outcome

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Life insurance is becoming an important debate today. However, purchasing an insurance policy demands some knowledge pertaining to the insurance world. A policy is an important tool used for protecting family members in case of an unfortunate outcome. It is a savings and investment tool. The right insurance policy can provide a substantial amount of money to cater for hospitalization or surgery. In case you have reached your retirement age and you have debts that remain unpaid, the right life policy can play an important role in providing money to pay for the children's college tuition or to pay off the mortgage loans.

Types of Life Policies

There are different types of life policies including whole life, permanent life and term life insurance. Buying whole life insurance is an important decision. The whole life one is designed to last as long as the policyholder is alive. Premiums are paid every month and once the policyholder dies, the beneficiaries will be in a position to receive the lump sum. Whole life insurance is different from the term insurance. The latter runs for a stipulated set period normally 5, 10, 15, 20, 25 or 30 years. In case the policyholder dies during that time, the policy pays out a tax free cash lump to the beneficiaries. However, if the policy holder lives beyond this term the plan has no cash-in value. You will not receive any return on the premiums.

Pros & Cons of the Whole Life Insurance

Besides providing lifetime protection, the main benefit of the whole life policy is that it offers coverage until the policyholder dies. The other benefit of the whole life is that it has an extra component in the form of an account that matures at fixed rates. It is more expensive than the term insurance. This explains why many people choose the term life policy. Furthermore, you do not have to keep paying up the premiums with the term life insurance when you are old into your 70s or 80s, when you may not need the coverage to protect the beneficiaries. The reason whole life cover it taken is to assist with managing the family's tax bill, especially inheritance tax.

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