The article concerns the following question – What is Life Insurance for? Life insurance provides security for people who need you financially in the case of your death.
If you die, some of your family may suffer because they have always relied upon you in the past. In this instance, taking out a life-insurance policy is the best way to put your mind at ease as you know they will be paid a compensation sum when you go that will provide for their needs.
This can be in the form of a regular income or a lump sum. If you expect to die within a term of time, like ten to twenty years, many people will take out term life-insurance.
However, if you do not die in the specified term you get nothing. A whole life-insurance plan will definitely pay out at whatever time you die. Some policies allow for some investment into the plan, which are more expensive plans. Protection-only plans do not have this facility but are cheaper.
The Costs Involved with Life-Insurance Plans
Different plans will come with different costs depending on what features a plan has. A whole-life insurance plan that will pay out whenever you die will cost more than a term life-insurance plan, obviously because you have the benefit of knowing for sure you will be paid at whatever time you go.
The risks you take in your everyday life will affect the cost of a plan. If you smoke or have a dangerous occupation you can expect to pay more. Men pay more for life-insurance than women because they most often do not live as long. The costs involved with a plan may not necessarily be representative of different types of cover. In other words, some plans can cover the same things but be more expensive. So make sure to check exactly what is covered in a plan, not just the price of the plan. This will help you get the best deal.
Other Factors to Think About
There are other main things to think about regarding a life-insurance plan. Some will have exclusions, which are circumstances under which the policy will not pay out. For example, a death due to alcohol or drug abuse may mean no pay out. Or, you may not be covered when you put yourself in dangerous situations like playing thrill sports.
Make sure you know all the types of exclusions in the policy. The flexibility of policy plans vary too. They may allow you to increase or decrease your cover according to what your changing circumstances in life are, or they may not. They may charge you extra for using this facility, or if you miss a payment there may be different results.
They may offer you a grace period or your plan could be cancelled. Consider all these variations ahead of time when taking out a plan. A waiver of premium can be included which allows you to keep the plan if you have missed premium payments due to being out of work for some time. Instead, the premium payments are made for you.
Changing Insurers and Flexibility Arrangements
Changing insurer is a natural thing to want to do in some cases, but be aware that your changing circumstances may mean that premium costs have risen due to older age or medical conditions. Do not cancel a cover immediately when you are not sure that you are covered by a new plan. Make yourself aware of the new various benefits and exclusions of the new plan before going ahead and changing.
If you wish to set up your policy to go into a trust this is a great idea for choosing to pay out to a dependent of your choice, however legal and financial advice should be sought on this as rules involved can be quite complex.