WHAT IS LIFE INSURANCE?
Life insurance is a category of insurance Policy. And it entails a contract where an insurer, in exchange for a premium payable by the insured, guarantees payment to the Latter’s beneficiaries upon his death. in this article, we shall discuss when to consider life insurance.
The primary function of life insurance plan is to make provision for a financial benefit to dependants of the Policyholder upon death. The insurance company pays a specified amount called “death benefit” to certain beneficiary (ies), when the policyholder dies. This death benefit will reduce the financial burden associated with settling your affairs, including funeral costs, debt payments and your estate. It can also help to provide your beneficiaries access to money when they need it after your death.
Understanding life insurance will certainly help you in making plans for your family’s long-term financial needs.
BENEFITS
- It makes provision for financial security for its beneficiaries.
- Makes provision for spreading of risks. This is of course, the basic principle behind insurance. That is to spread risks among a large number of people
- Life insurance encourages Savings.
- It equally helps to encourages international trade
DISADVANTAGES
- Buying life insurance can be very expensive for unhealthy or/and old Subscribers.
- Whole life insurance is expensive no matter what age you get it.
- It’s easy to be misled if you’re not well-informed in issues of life insurance.
- Life insurance policies provides for exclusions. Not all life insurance policies make provision comprehensive coverage as there are always certain exclusions. For instance, your insurance policy may not cover loss of life due to suicide or involvement in unlawful activities.
- Some insurance companies may not pay the death benefits
WHEN TO CONSIDER LIFE INSURANCE
The right time to buy life insurance varies from person to person, depending on family and financial circumstances. But the sooner you purchase life insurance, the better, as it becomes more expensive with each passing year.
Generally, you need life insurance if other people depend on your income, or if you have debt that will carry on after your death. After all, you don’t want to leave your loved ones without money to live on… or on the hook for your credit card debt. In other words, you need to consider taking life insurance coverage if others depend if others depend on you financially or you have debt that will survive you
WHY LIFE INSURANCE IS BETTER AT YOUNG AGE
It is of good timing to buy life insurance coverage at a young age. Doing this presents a great deal of advantages to the policy holder. Therefore, the younger you are when you buy life insurance policy, the better. This is because at a younger age, you’ll qualify for lower premiums. As life insurance policies are always cheaper in its premiums when you buy them at a young age. But the more you grow older, the higher the annual premiums payable by you. The reasons for this, is that as you grow older, the tendency of developing health issues becomes very high. And this makes purchasing life insurance more expensive and at extreme cases, you can even be disqualified from purchasing a policy.
As a young person who is usually faced with huge financial challenges, you would usually want to defer buying life insurance policy. But notwithstanding this, failure to buy life insurance at a young presents a devastating economic implication. Therefore, the sooner it is purchased at a young age, the better. Not buying life insurance policy at a young age is not economically friendly as it can be very costly. For instance cost of a 20-year level term policy with a $200,000 face amount is about $210 per year
CATEGORIES OF LIFE INSURANCE POLICY AND WHEN TO PURCHASE THEM
TERM LIFE INSURANCE
This is a class of life insurance policy that covers you for the term ain as stated on the policy. For instance, it could be for a period of ten or twenty years. Generally, it is advisable to purchase term life insurance at a younger.
Your timing of when to purchase term life insurance policy could be when you anticipate having dependents. And in such circumstance, it is advisable that the term of your policy should cover as long as your dependents will need your income. However, in the case of parents, it is advised that it is until their children are fully independent.
WHEN TO BUY PERMANENT LIFE INSURANCE
This is a class of life insurance policy that is advisable to get if you have reasonable financial obligations that are not time bound. For instance, if you have assets that your dependents would need to pay estate taxes upon your death, then it is advisable that you purchase a permanent life insurance policy that will cover those taxes. However, the benefits needs time to grow, and as such, it is best to start early enough.
WHOLE LIFE INSURANCE POLICY
Whole life insurance policy makes available consistent premiums as well as cash value accumulation. It is guaranteed to remain in force through the holder’s lifetime provided the required premiums are paid. And just like other forms of life insurance policy, it is highly advisable to purchase whole life insurance policy at a very young age so as to take advantage of low and cheap premiums.
CONCLUSION
It is safe to conclude “when to consider life insurance” that the best time to buy life insurance policy is at a young age. However, not minding the type of policy you consider appropriate for your circumstances, it is advised that you make thorough research about the insurance companies you’re considering buying coverage from so as to get the best packages.
