What Is Life Insurance Policy
Know more about life insurance meaning, benefits& types of life insurance in detail.
If you are wondering what is life insurance meaning, you should know that a life insurance policy is a contract between an individual and an insurance provider, in which the insurance company gives financial protection to the policyholder in exchange for monthly fees .
As per the life insurance definition, the insurer pays a sum assured to the policyholder or to the named nominees in case the policyholder meets with an untimely demise in exchange for the premium payments made towards a life insurance policy.
Based on the arrangement, in the event of the death of the policyholder or, if the policy matures, the insurance provider shall pay the person or his family a lump sum amount after a certain amount of time. There are different types of life insurance policies to suit the individual needs and requirements of the policy buyers.
Understanding life insurance definition, its benefits and features is important before you buy one. Read on to know more about what is life insurance meaningfor you.
How Can A Life Insurance Policy Be Tailored To My Needs
Almost all life insurance policies have optional features called riders that can provide valuable added benefits that tailor the policy to your needs.10 For example, Guardian has riders that can help protect family assets by paying for chronic care and end-of-life needs while the insured is still alive.
Term Life Insurance Policies
These run for a fixed period of time, known as the term of your policy, such as five, ten or 25 years. They only pay out if you die during the policy.
There are three kinds of term life policies.
Q How Can I Revive A Lapsed Life Insurance Policy
Typically, to revive or reinstate a lapsed life insurance policy, the policyholder must send forward an application to the concerned insurance company. After the application, the insurance provider may propose submitting a standard revival form.
However, depending on individual insurance companys internal policies, the option to reinstate a lapsed life insurance policy may or may not be available.
How Much Life Insurance Do I Need
The level of life insurance cover you will need depends on your individual circumstances, your life stage and the type of insurance you are considering.
Moneysmart recommends that in order to work out how much cover you may need, you should consider how much your family would need and how much they would receive. The amount they would need could include expenses such as paying off your mortgage and other debts, as well as general living expenses such as childcare and education. The amount they receive may come from your superannuation, shares, savings and existing insurance policies and any paid leave you have.
You may also wish to consider whether other members of your family could provide any support, and if so what type of support they can offer. For example, family members may be able to help in caring for your children if you have any, and this could help towards alleviating childcare expenses, for example.
Moneysmart also suggests that you check whether you already have life insurance through your super fund.
You can use Canstars life insurance calculators to help you estimate your life insurance needs and the cover you may be eligible for:
You May Like: Ace American Insurance Phone Number
Do You Need Life Insurance If Your Mortgage Is Paid Off
Do I need life insurance to get a mortgage? Legally, you dont have to take out mortgage life insurance if you take out a mortgage. However, many mortgage lenders will insist on it to protect their loan in the event of a householders death.
Reasons Why Life Insurance Is Important
Whether you’re married with kids, or have a partner or other relatives who depend on you financially, having life insurance can be important. Life insurance provides money, or what’s known as a death benefit, to your chosen beneficiary after you die. It can help give your loved ones access to money when they need it.
Understanding life insurance can help you plan for your family’s long-term financial needs. Here are five reasons why life insurance is important.
Don’t Miss: New York City Car Insurance
Wealth Protection & Distribution
Life insurance plans are one of the safest long term investment options. Thus, a life insurance will mean you can preserve your wealth for a long time against tax and inflation. This feature means that a life insurance plan is also a great instrument for retired investors to generate long-term pension.
S In The Insurance Buying Process:
Remember, working with a financial professional can help make this whole process easier. A financial professional can help explain the differences between types of policies, help you calculate the amount you need, and present potential options that may best suit your needs.
Read Also: Work From Home Insurance Agent
What Does Life Insurance Not Cover
Criminal activities. In general, if you die while committing a crime, your beneficiaries wont receive the death benefit. This can apply to drug and alcohol abuse. For example, if you die while driving drunk an illegal activity the policy typically wont cover the death.
High-risk hobbies. Unless your policy specifically covers hazardous hobbies like skydiving, dangerous activities are typically not covered.
Misrepresentation. If you lie on your life insurance application, the insurer may cancel your policy. Make sure you’re as honest and open as possible when applying for coverage.
Can You Use Your Life Insurance Money
Withdrawing Money From a Life Insurance Policy Generally, you can withdraw money from the policy on a tax-free basis, but only up to the amount you’ve already paid in premiums. Anything beyond the amount you’ve already paid in premiums typically is taxable. Withdrawing some of the money will keep your policy intact.
Recommended Reading: Full Coverage Car Insurance For Cheap
Life Insurance Can Be Expensive If Youre Unhealthy Or Old
Life insurance is most affordable if youre young and healthy. Your premiums are determined by your medical profile, family medical history, and age, so life insurance companies will charge you more for coverage if your profile includes anything that could potentially increase your risk of dying early. And if youre so unhealthy that your medical bills are already a significant burden on your finances, life insurance might be helpful to your loved ones but hard on your wallet.
All things being equal, a $500,000 life insurance policy would cost approximately $20 more per month if you got it in your 40s than if youd gotten it in your 20s. Most people earn more income as they get older than they did when they were younger, so that extra cost may not be a big financial burden but youll still end up paying more the longer you wait to get coverage.
It Can Help To Pay For Future Education Expenses
If you have children, life insurance can help your family pay for future childcare and education expenses, especially for college. Even if you’ve already started contributing to a 529 college savings plan, the death benefit from a life insurance policy can provide additional money to help cover your children’s education if you were to die.
Recommended Reading: What Does Renters Insurance Covers
What Are The Different Types Of Life Insurance
Now that you are aware of what is life insurance meaningand life insurance definition, you should check the main types of life insurance plans:
- Term Life Insurance Plans Pure risk covers
- Unit linked insurance plan Insurance as well as Investment opportunities
- Endowment Plan Insurance and Savings
- Money-Back Periodic returns alongside insurance cover
- Whole Life Insurance Whole life coverage to the life assured
- Child’s Plan For achieving your child’s life goals like education and marriage
- Retirement Plan Post-retirement income
Lets learn further and understand the specifics of different types of life insurance policies.
Is Buying A Life Insurance Policy Worth It
A life insurance policy aims to protect your family. In simple terms, the death benefit received by the nominee replaces the financial assistance you provided to your dependants. In the wake of the pandemic, more people are scrambling to buy the best life insurance. Because of the financial security it provides, buying a life insurance plan is worth it. In a way, this smart financial tool must be an integral part of financial planning. Your family will be financially savvy in case something happens to you. If you protect your loved ones with the promise of a life insurance plan, you can be assured of fulfilling all the promises you had made to them, even if you are not around. And Canara HSBC Life Insurance will always keep Aapke Vaade Sar Aankhon Par. Listed below are our top life insurance plans that you consider:
Also Check: Does Target Offer Health Insurance
Term Life Insurance Lets Younger People Lock In Low Rates
Alternatively, term life insurance is the best choice for most people because it is the most affordable. A term policy is meant to last until your debts are paid off . The benefits of a term life plan include:
The cheapest life insurance you can buy.
If you buy term life insurance when youre in your 20s, 30s, or 40s, you can lock in low rates.
Term life insurance is purely an insurance product and doesnt have a savings or investment component. This is a good thing investing and saving on your own yields higher returns.
If you have a term life policy and no longer need it, you wont lose anything more than the premiums youve paid.
Who Needs No Life Insurance
If you’re a single person with no dependents, you probably don’t need life insurance at least not yet. Financial experts recommend life insurance particularly for people who financially support either a spouse, children, or other relatives. That means people other than themselves rely on their income to live.
You May Like: Allstate Homeowners Insurance Phone Number
It Can Cover Funeral Expenses
Funerals can be expensive. Dealing with this financial stress can add to the emotional stress your family might experience. Your family could use some of the death benefit from your life insurance policy to help pay for these costs. To do this, the beneficiary of the policy could direct some of the death benefit to the funeral home, or they can pay out-of-pocket and use the death benefit as a reimbursement for these expenses.
What Is Life Insurance For
Life insurance is important, as it protects your family and lets you leave them a non-taxable amount at the time of death. It is also used to cover your mortgage and your personal loans, such as your car loan. Your individual life insurance follows you when you retire and you are no longer insured by your employer. This insurance will also replace your family income when resources are less so they can maintain their quality of life.
You May Like: What Disqualifies From Long-term Care Insurance
Whole Life Insurance Is Expensive No Matter What Age You Get It
Term life insurance is a great deal. But whole life insurance is much more expensive, often clocking in at hundreds of dollars per month. For the vast majority of Americans, thats simply too much money, even if you do get coverage out of it.
Whole life insurance is much more expensive because it lasts your whole life youre guaranteed to die while its active as long as youve been paying your premiums. But most people dont need as much life insurance after they retire, when they dont have any dependents, their home is paid for, and they dont have any outstanding loans. That means the extra years you spend paying whole life insurance premiums past retirement age dont return as much bang for your buck.
Ready to shop for life insurance?
Can You Use Life Insurance While Alive
Life insurance allows you, the policy owner, to build cash value through your life insurance policy that accumulates over your lifetime. This is considered a living benefit of life insurance because, in contrast to a death benefit that pays out when you pass away, you can use the money while you’re still alive.
Also Check: Does Insurance Cover Std Testing
How Do You Spend Life Insurance Money
What is Best to Do With Life Insurance Payout Proceeds?
Get Insured To Stay Secured
Purchasing a life insurance policy is a necessity in our times. While many buy in different types of life insurance policies, not all know about the many benefits, it offers. In your absence, the meaning of life insurance is to support your family in times of difficulty and gives them financial assistance.
Moreover, investing in the life insurance policy encourages a disciplined habit of savings. Thus, it enables one to create a significant corpus.
Life insurance policies from Max Life Insurance help safeguard your financial future and lets you earn multiple other benefits. So, choose to buy life insurance policy now and stay secured!
Recommended Reading: Crm Software For Insurance Agents
When Is The Right Time To Apply For Life Insurance
- Life insurance typically costs less when you are younger.
- As you get older, your health could deteriorate, which would make premiums more expensive.
With these reasons in mind, you may want to think about getting life insurance sooner. Major life events such as getting married, having children, retirement or buying a home can be reasons to start considering your life insurance needs.
Explore Life Insurance Plans The Easy Way
If youre ready to get a term life insurance policy or are just curious to learn what affordable options are out there for you, check out Haven Life. Not only does Haven Life offer the first place to buy life insurance online, and thus drastically shorten the several week process associated with traditional companies, you can also compare their pricing to that of top rated insurers.
Not sure how much insurance is right for you?
Haven Life also has a life insurance calculator and quote options you can use to educate yourself on your life insurance needs and the associated cost. Haven Lifes simple process is spelled out in plain English and is pretty devoid of confusing legal jargon. Whats also great is Haven Life is backed by MassMutuals 165 years of financial dependability something you want when you are purchasing a 30-year promise to your loved ones.
Untemplaters, do you currently have any life insurance coverage? Are you paying out of pocket or covered by your employer? What was your experience like applying for life insurance?
*The rating is as of June 15, 2016 and is subject to change. MassMutual has received other ratings from different rating agencies.
Haven Term is a Term Life Insurance Policy issued by Massachusetts Mutual Life Insurance Company , Springfield, MA 01111 and offered through Haven Life Insurance Agency, LLC
You May Like: Is Title Insurance Worth It
Lessons For Life And Health
However, if P& C carriers have a head start in embedded innovations, life insurers are catching up rapidly. Insurers are partnering with companies and platforms that can present a digital offer strategically when consumers are motivated by relevant life events, such as applying for a mortgage, preparing for a new baby, enrolling in a college savings plan, or entering a student loan agreement. Examples include:
What Does My Life Insurance Cover
Life insurance is designed to help your family cope financially when you pass away. If you suffer a serious illness that may have an impact on your finances, you could consider critical illness cover. What your life insurance will and wont cover depends on which insurance company youre with, so check your policy documents, but the basic principles are the same.
But yes, if you die in a bungee jumping accident, well still pay out no guarantees your left-behind loved ones will ever forgive you, though.
Don’t Miss: Capital One Venture X Travel Insurance
Why Buy Life Insurance
There are several common reasons for buying life insurance, including:
- To replace your income for any dependents who rely on that income.
- To pay for funeral expenses and other final expenses.
- To provide a financial legacy for heirs.
- To pay estate or inheritance taxes.
- To provide a donation to a charity.
- To create a savings vehicle if there is, or may be, a life insurance need.