What is Life Insurance?
In simple words life insurance is for those who depend upon your salary. If you die precipitately, your life insurance will provide your dependents with income to replace yours to fulfill their basic need as long as they need it.
Basically it is an agreement between insurer (Person who is buying insurance policy) and the insurance company. The insurance company has to pay an amount of money as mention in the agreement in case of serious illness, accident or death. Whereas the insurer pays a premium for the specific period to his insurance company as per the written agreement and the company pays back lump sum or in installments to the named beneficiaries in the agreement. If the insurer dies within the specific period, the life insurance company is bound to pay a sum of money to one or more than one inheritor. But if the bearer survives the term, he or she may receive a part of full of the face amount of the policy according to their policy. There are different types of life insurance that will be discussed in another post.
Life insurance policies are legitimate contracts and the terms of the agreement portray the restrictions of the guaranteed occasions. Particular exclusions are regularly built into the agreement to restrain the obligation of the insurer; most common examples are cases relevant to suicide, extortion, war, riot, and common uproar.
Why We Need Life Insurance?
Everybody wants to live long and don’t want to think about their own death. It is very difficult to plan things that are going to happen after your death. You don’t need to buy a <a href=”http://thefinancialservices.info”> life Insurance </a> if you are not going to leave any loved one behind because with very little planning, you can make savings very easily to cover your funeral expenses and invest the money that you would have paid to the life insurance companies. You might want to acquire insurance to pay your estate taxes, so that the inheritors don’t have to exchange assets at unfavorable costs to pay them.
But if you have a family and you are the lone money earner then you should worry about them. You should worry that how would be their life after you? Will they be able to afford your funeral expenses? Will they be able to spend their life with the same lifestyle as they are being accustomed now? Will your children have good education and all the expenses?
After covering the basic food and housing necessities, the next priority is likely to be the life insurance installments, even ahead of auto loan, credit card payments and retirement savings.