How Essential Is Life Insurance

Being alive seems so essential that most of us wont even bother themselves worrying

about the possible consequences of a death, serious illness or even a simple injury. Working individuals are usually granted a health insurance which covers a visit to doctor in case of flu, simpler first aid and even some procedures in case a hospital is needed. But what happens if the change in persons health is permanent, affects future work and leisure quality or even ends up with a disability?

The answer is that regular governmental social security policies may cover up your expenses visiting the doctor and the cost of procedures, but it cannot reimburse the value of worsened life qualities or even worse, in case of ones death the related persons are left with sadness and the duties to arrange the funeral and pay the bills of the dead.

In this point a life insurance comes handy. Insuring your life gives you the security that in any case of injure, accident, illness or death you will get a reimbursement equal to the value of life quality that is affected by that certain event. Making a life insurance deal means signing a contract between the insurer and the policy owner, where the insurer agrees to pay a designated amount of money in case of any event stated by the contract occurs. Usually there are covered incidents like death, critical illness and critical injury, but various other conditions may apply specific to policy type or policy provider. Next big question is how to make sure your insurance suits your needs and abilities, since this is a financial act with many various specific conditions and terms.

To begin with, insurances are divided into two different categories. One is a term insurance, a temporary contract with a duration determined by the policy owner; the other is a permanent insurance, a life-long policy with duration until the death of the policy owner.

Three major parameters are considered while choosing suitable term insurance:

1.Term - the length of time the insurance is valid. This usually varies from one to thirty years. Some companies offer a renewal or conversion options upon the expiry.

2.Face amount the reimbursement amount covered by insurance in case of any incident. This can be a fixed amount depending on incident or be a variable, for example decrease until the contract is over according to the age of insured.

3.Premium to be paid the financial duties of an insured person. This could be a lump sum, fixed periodical fee or a variable calculated by age and any additional risk factors.

Permanent insurances have four general categories.

Firstly a whole life coverage insurance which has a fixed premium and certain cash value table provided by the insurer. The advantages of this insurance type are guaranteed death benefits, guaranteed cash values not dependant on mortality or expense charges and fixed and known annual premiums. On the other hand, this policy type is quite inflexible and might not be competitive compared to other investment types.

Secondly, universal health insurance is a type with decreasing face amount. Decrease is calculated by mortality and interest rate which means that over the time face amount decreases as the person gets older and the possibility of death rises. Interest is charged to maintain the company and the service provided. This is a flexible option with the possibility to reduce or cut the premiums in case of sufficient cash value. Also this is a suitable option to help vary the final death benefit by ones wishes.

Thirdly, limited pay insurance will grant you a benefit as other types; however you will pay premium for only a determined time or until reaching a certain age.

Fourth option is endowment policy. This means the premium is paid until the policy matures with mature date or age set by contract. Face amount is paid upon maturing or death earlier than mature date, but it is also possible to surrender meaning that you will get the amount depending on time the contract has been effective.

These different policies make insuring the life a personal solution, which is a tailor-made according to ones needs and abilities. Making an online life insurance policy is a simple way to ensure that you can feel safe, whatever comes around. To find an offer suiting your needs contact a company offering life insurances to see further details.

by: johnalbert21