Monday, 2 September 2019

All You Need To Know About Life Insurance

So You Do Not Go For The Wrong Idea, Get Secured Or Not? Let’s See!

Insurance as a Concept
All the life, people around the world work hard and die hard to earn more and more for the secure and balanced future. They make plans and have certain dreams for their lives. In order to achieve them, they set some goals for the life on various levels. They earn and the most common practice that they undergo is savings.

People save mostly to do stuff in future. Often they make savings with the insurance companies. This means that they keep their money safe with the banks and institutes who would save their precious money and financial resources for them. People pay money in the form of yearly intervals and these payments are known as premiums.

Defining the Insurance

Insurance carries clauses of legal binding in the written document as it is a contract, a contract which is to be signed by and carried down between the two parties i.e. insurance company (and the insurer) and the individual or business organization (or you can simply call it the insured party). The contract binds the legality of payment by the insurer to the insured party in case of demand or need with proof of need or after the maturity period of the insurance contract is completed.

Concept of Life Insurance

In the above discussion, we have been talking about the plans we as humans make for our lives. While, the point of the discussion is quite opposite. People keep on running after materials and money to secure their future. However, they cannot even give a guaranty of their future as well. They can’t make sure or even be sure of how much of life they are left with.

Also, there comes another fear or who will do what they are doing after them. They are mostly the bread earners for their households and family and they worry about their families more than they worry for themselves. The journey of life is not easy certainly however, the worry for death can make it even more miserable. This is where the insurance companies come as becoming the guardian angel for you.

Why One Should Go For Life Insurance?

Obviously, the insurance companies cannot stop anything bad from happening. However, they can surely minimize your risks for you when you go for a ‘Life Insurance Policy’. The people go through certain fears that:

1.    Who is going to take care of my family after me?
2.    Who will be maintaining a balance financial stream for my household?
3.    Who can my family rely on if not for me?
4.    Will there be financial constraints after me within my family?

People with such fears usually are suggested to get themselves insured as early as possible for their families to stay out of financial problems in case of their demise. This means that we have to accept that after death, we always leave certain people who have to keep fighting and running errands on daily basis to keep surviving in the world under all the social pressures.

Your life insurance policy might not cover for their life time expenses, obviously it will not. However, it will provide your beloved with some financial cushions so that they can take their time to be stable enough for themselves and each other.

How Will Life Insurance Work For You?

Life Insurance work wonders for the policy takers. However, there are three main ways or Life Insurance mechanisms discussed as below:

1.    Benefit atthe Time of Death

The most clear and common benefit of the Life Insurance policy is the benefit of the financial cushions received by the insured’s family from the insurer i.e. the insurance company. The insurance companies give a guaranty that the beneficiaries of the insured as mentioned in the insurance policy, will be given the amount of the insurance after the insured’s demise.

The amount of insurance is estimated as per the future expenses predicted by the insured person. There are also certain percentages of interests added to the amount of insurance premiums depending upon the duration of the insurance policy and amount of premiums as well.

2.    Premium Payments Refund

There is a special method to calculate the premium payments of the insurance policy. This method is based on actuarial science and specifically known as actuarially based method of statistics and mathematics. In this method, the insurance companies are responsible for determining the:
a.    Cost of insurance
b.    Administrative fee
c.    Mortality costs
d.    Maintenance of policy fee

However, there are some factors more to determine or fluctuate the premium amount. These are the policy buyer’s or insured’s:

a.    Age
b.    Professional threats
c.    Medical history
d.    Risk propensity

With the timely payments of the premiums been made to the insurer by the insured party, the insurer becomes liable to pay the amount of death benefit to the beneficiaries of the insured. Usually in the case of universal life insurance policies which are also considered as permanent policy for life insurance, the premium includes all type of costs along with a specific amount of cash value.

3.    Cash Value

As we mentioned above that cash value comes in the universal or permanent life insurance policies, it has two purposes to offer behind. These purposes are:
a.    It can act as a savings account for the lifetime duration of the insured party. Although, there might be certain limitations regarding the withdrawal of the money.
b.    It can also act as a balancing agent in case of rising of the cost. Also, it provides insurance as a prime purpose.

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