Your guide to life insurance policies

How Life Insurance Plans Work

Your life insurance policy is a way to ensure that there will be a cash payment forwarded to your family once you are gone –this is called death proceeds or death benefit. In a time where most people keep working to pay for their mortgage or other loans, life insurance benefits have become more important. The said policy is a way for the policyholder to protect their loved ones from debt but the question is, which type of policy should you get?

Term and Whole-life Insurance Plans

Term insurance is the usual choice for those who are trying to save some money but this policy only lasts for a number of years i.e. from one year up to 30. If the policyholder dies within the said term, the insurer will pay the beneficiary. However, if the insured is still alive once the term ends, the insurance ends as well.

Whole-life policies on the other hand insures policyholders that the beneficiaries will get the death proceeds upon the policyholder’s death.  One great thing about this insurance policy is that the insured can use the policy to pay for certain things i.e. through borrowing against the cash value of the insurance plan.

If you want guaranteed benefit for your loved ones, getting a whole-life policy is a good decision.

For those who are looking for a more flexible policy, getting universal-life is a good idea. This is the same as a whole-life policy but gives one the choice to change the premium and even the cash value of the said policy. Unlike whole-life, a universal-life policy does not have a fixed premium. However you can always stick to your first premium if you want to but it is possible for you to increase it as well. But the question is, once you increase the premium where will the money go? This will be transferred to cash value accounts. These accounts enable you to not pay for your regular premium for a year. If flexibility is what you want in your policy, universal-life is most definitely a great choice for you. However, one must keep in mind that paying too little premium might result to a lack of cash value.

Getting life insurance as early as you can is a good financial decision. If you are not yet decided on getting a life insurance policy, you should take into consideration that this is an investment.



Frequently Asked Questions

Should I really get a life insurance policy ?

The answer here is pretty straightforward –YES. An insurance policy whatever it may be for is a financial investment. If you are not convinced that this is needed and just think that this is just an unnecessary expense... read more

Life Insurance Glossary

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