Life Insurance Policy is one of the most important purchases an individual can make. Many individuals consider death as an unavoidable natural event. Since there is a chance of death, individuals who do not have life insurance are perceived as risky borrowers. Unfortunately, the number of deaths due to natural disasters and accidents continues to rise.
Since death is inevitable, individuals must find a life insurance company that best provides benefits for the lowest premium. Unfortunately, most individuals assume that they need a death certificate and a payout from the insurer. Although many individuals believe they need life insurance, they do not know the policy, or the different options often prevent them from accurately determining the cost of coverage. According to the 2019 Insurance Barometer Report by various industry groups, perceptions of value and affordability often discourage people from purchasing life insurance. The increasing number of insured deaths may be attributed to inadequate knowledge about the benefits an insured individual can receive through a policy.
To determine the amount an individual will receive for his or her premium, the policyholder should first understand how the policy works. Under a standard, universal, or whole life insurance policy, there is only one beneficiary, the insured. Once the insured individual has paid premiums for the policy, he or she is legally obligated to provide a designated sum of money to the insurer on the death of the insured. If the insured does not have an insurable interest in the property insured under the policy, the proceeds remaining from the premiums are given to the estate of the insured.
As an alternative, some individuals purchase permanent life insurance options. A permanent policy offers more flexibility than a basic permanent life insurance policy. Some permanent life insurance options have more than one beneficiary. If an insured individual has more than one child, he or she may wish to consider purchasing separate policies that offer separate coverage for his or her children.
Another way an individual can purchase life insurance coverage is through what is known as a limited liability company or LLC. An LLC is a legal business entity that exists for the benefit of its investors. In return, the investors of a limited liability company to receive profits from the business. This type of life insurance coverage allows the insured to control his or her estate, in the same manner that a single person can. However, to take advantage of this opportunity many individuals choose to purchase a term policy.
Term Life Insurance is purchased in order to cover the burial costs of a single person. As an example, if an insured individual dies while his or her spouse still is a single child, the surviving spouse may obtain a lump sum payment to cover expenses. However, if the surviving spouse is not married and does not have children, he or she will be forced to pass away without any death benefits. To make matters worse, should he or she die, the surviving spouse will then have to pay premiums on a life insurance policy in order to pay off the remaining balance of the loan for the burial expenses. Therefore, should the child not pass away, then there would be no way for the surviving spouse to make any payments on the life insurance policy.
Finally, many individuals purchase whole life insurance policies. These policies are usually more expensive than other types of coverage, such as term policies. The reason for this is that whole life insurance policies are designed to cover the policy owner’s entire lifetime. These premiums are usually far greater than the premiums that insurance companies use to pay when they insure a person for only thirty days.
It is important to remember that purchasing term life insurance provides coverage for only a specified time period. Therefore, if the insured should pass away during that period, then the surviving spouse would have to begin paying off the loan immediately. However, it should be noted that the premiums on term life insurance policies do increase in value if the policy owner does pass away during the specified time period. Therefore, an individual should take a look at all of their options when it comes to life insurance before deciding which type of policy is best for them.