Essay on A Brief Guide to Life Insurance

Life is quite unpredictable in so many ways, and no one knows about the length of his/her life. You may have a situation, where a family is totally dependent on you, and you are the sole bread earner of the family. What if you die? Who will take care of your family? It is true that no one likes to talk about death, but it is a bitter reality, which everyone has to accept. So, it’s better to have some plan to protect your loved ones if you die, rather leaving them to live in miserable conditions. This protection is provided by the life insurance policy, which you can avail from a variety of insurance companies.

What Life Insurance is?

First of all, you should understand what life insurance is. Life insurance is a legal contract between you and the insurance company, where it is guaranteed by the insurer that if you die, they will pay a certain amount of money to your loved ones, who have been designated as beneficiaries for your life insurance plan. You pay a certain premium amount on a monthly or annual basis, and in return, you are insured by the insurer. After buying an insurance policy and paying a certain amount of premium, if you die as a policyholder; your family will get death benefits. It may sound awkward to talk about one’s own death, but this is a reality, which no one can ignore. So, it’s better to accept this reality and prepare for the future, where your loved ones don’t face any hard times if you die.

Different Types of Life Insurance: It is important to understand different types of life insurance so that you can choose the best one for you. Here are basic types of life insurance, which are provided by life insurance companies all around the world:

Term Life Insurance: This type of insurance is not life-long; rather it has limitations in terms of years, and it ends when that period of time is gone. Your insurance company will brief about the term periods, which can be 5 years, 10 years, 15 years, 20 years, or even 30 years. So, you can choose a term period as per your convenience and requirements.

Increasing Term Insurance: It is a kind of renewable term policy, which is renewable every year. In this type, the premium will be lower for the insurer at a young age, and the premium will start to increase with the period of time.

Level Term Insurance: In this type of insurance, the premium amount remains the same for each year without increasing it at any point in time.

Whole Life Insurance: In this type of insurance, the cash value of the insurer is accumulated for his whole life, even he/she lives for 100 years. If you die after buying this insurance policy, then the death benefit will be paid to the beneficiaries as per the given policy. This type has further three types, which are named as variable universal life, universal life, and traditional whole life insurance.

            So, these are some of the basic types of life insurance policies, and you can opt for the one, which is suitable for your income and requirements. If you want to get protection for your family in case of your death, then life insurance is the best option, which you should consider to choose without any hesitation.