Financial safety is not something that can be attained easily and on a day-to-day basis, especially when one relies on a source of income that assures the basic requirements of living. Because we can get hectic with money and sometimes forget that we must also put something aside, we can now settle for legal agreements that help us save money. Life insurance is a legal agreement that accomplishes the purpose of saving money for undesired yet possible events that may trigger some unexpected expenses (death or critical illness).
By paying monthly premiums for a specified period of time, policyholders can insure that the beneficiaries (most likely family members or close relatives) will receive a consistent sum of money helping them to cover burial expenses and unpaid debts of the deceased policyholder. Sometimes, the money can simply ensure the beneficiaries’ survival until they are back on their feet and able to sustain themselves financially.
Even though the natural human tendency is to avoid tackling serious issues and thus discard the gloomy thought of death, it is best to have a more earthly approach and consider sparing your loved ones from dealing with every expense. There are various types of life insurance, their differences depending upon the insurance company and upon a set of factors (such as age, health and lifestyle). The most widely-known type of life insurance is the term insurance. It is usually suitable for people who are married and/or have children. With this type of insurance, the policyholder makes sure that during an unwanted event, his/her family will be protected from debt. The term insurance has a limited viability period (5, 10, 15 or 20 years). It can also cover an existing mortgage and thus it can expand as long as the mortgage does, even if the policyholder dies within this period.
Life insurances that are taken for the remainder of one’s life are called permanent life insurances. They are usually more expensive than the previous type, but the benefit is also more valuable. The benefit is paid out to the policyholder’s dependents in the event of his/her death and it helps them pay taxes and existing mortgages at the time of death. Last but not least, life policies can also be given in case of terminal or critical illness, as this can jeopardize the financial state of those who depend on the affected person. Terminal or critical illness insurances help those temporarily unable to work continue paying their debts, taxes and even medical treatment.