What is Life Insurance?

Life Insurance is an insurance policy that provides an agreed amount of cover over an agreed term, so that should you die during the policy term, a lump sum is paid out. Life insurance is considered as the cornerstone of financial planning. It is a cost effective way to provide for your family after you are gone.

Many of us will at some stage in our lives have the need for life insurance. Life insurance is an agreement between you and an insurer and under the terms of a life insurance contract, the insurer promises to pay a certain sum to a designated beneficiary when you die, in exchange for your premium payments. This may give you peace of mind that, should you die during the policy term, your family would have some financial security.

The most common reason for buying life insurance is to replace the income lost when you die. For example, say that you work, and that your income is used to support yourself and your family. When you die and your income stops the life insurance proceeds can be used to continue to support the family members you've left behind.

If you have dependants or your income is needed to maintain your family's standard of living you may need life insurance. If you died your family could use the money to pay off some outstanding bills or perhaps towards a mortgage. There may also be extra costs to deal with that were not there before; such as the cost of extra childcare. To decide if you need life insurance you will need to consider whether your family could cope financially without you and for how long.

Some people choose to take out a joint policy with their partner. This means the policy covers both people and is paid out when either person dies (but not both).

There are several kinds of policies that may be available to you, if you are healthy enough:

Term

Term Insurance is the basic life insurance. It provides financial protection bound by a specific time, usually between one to thirty years. They are comparatively inexpensive and are well suited for specific purposes, like insurance protection for paying off a mortgage or paying the tuition fee for college education. Purchasing term insurance is like renting a car, a short-term solution. Monthly costs are lower, but you will not be building any equity.

Permanent

Permanent insurance provides long-term financial protection. These policies include both a death benefit and, in some cases, cash savings. Purchasing permanent insurance is like buying a car instead of renting. You are taking care of long-term needs with a long-term solution. Your monthly costs may be higher than if you rent, but your payments will build equity over time.

The cost of life insurance varies depending on such factors as the insured's age, health, and occupation.

You may freely reprint this article provided the author's biography remains intact:

About The Author
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

---

House Insurance - Forcible and Violent Entry

Forcible and violent entry (f&ve) is the terminology used within... Read More

An Annuities Primer

Though popular among today's aging Baby Boomers and members of... Read More

Choosing Affordable Health Insurance For Children

In most cases, private health insurance comes through a person's... Read More

I Was In An Accident, Will My Car Insurance Rates Go Up?

You were on the phone, got distracted and before you... Read More

Guide to Life Insurance

Here is a useful guide to life insurance. Simply put,... Read More

Insurance For All Your Gadgets

Personalisation, Digitalisation, Mobilisation, these 3 words represent your life today.... Read More

How Do I Lower My Auto Insurance Premiums?

It seems as though the price of everything is on... Read More

Discount Auto Insurance - Keep Your Hard-Earned Money

Finding discount auto insurance is so easy when you do... Read More

Finding Term Life Insurance Online

What exactly is Term Life Insurance?Term life is a form... Read More

Life Insurance Providing Little Protection from Terrorism

Recent statements by the City of London Police Commissioner James... Read More

Life Insurance No Medical Exam - Is It Really Possible?

Quite often you feel that an ad for life insurance... Read More

High Risk Auto Insurance - How to Lower Rates

How is your driving record lately? Do you have a... Read More

Indemnity Insurance For Landlords

As a property owner it is essential to protect yourself... Read More

How Much Can My Auto Rate Increase After One Accident?

Accidents almost always make your insurance rates increase. Whether or... Read More

Health Savings Accounts (HSA): Do They Vary From State to State?

The Health Savings Account (HSA) is an amazing tool that... Read More

Health Insurance, What Does It Mean?

Your health insurance policy is an agreement between you and... Read More

New Concepts in Car Insurance - Pay as You Drive

You can pay as you talk with a cell phone... Read More

Millions of Americans have No Life Insurance

Only 61% of adult Americans have life insurance (down from... Read More

Term Or Whole Life Insurance - Which Is Right For You?

One of the most important things you will ever do... Read More

A Free Term Life Insurance Quote Is Only Easy To Obtain

By searching online for life insurance, you can get a... Read More

Are You Running the Risk of an Uninsured Business? Beware & Get Business Insurance

Human life is precarious and so are the activities they... Read More

How Is Your Auto Insurance Policy Price Determined?

The average auto insurance policy price is derived from a... Read More

Ever Wondered What An Auto Insurance Claim Adjuster Does?

An auto insurance claim adjuster works for the insurance company... Read More

Auto Insurance Rates

Auto insurance rates will vary depending on the insurance agency,... Read More

Mortgage Insurance Plans: How Good Is Yours?

Mortgage insurance, to pay off a mortgage, is something you'll... Read More

Medical Bankrupticies: What You Can Do To Protect Yourself

First the bad news: about 2,000,000 personal bankruptcies each year... Read More

Do Discount Fees for Medical Service Programs Really Work?

Having a health insurance policy provides a great sense of... Read More

Travel Insurance Pre-Existing Conditions Coverage - How It Works

What is a Pre-Existing Medical Condition?When a trip cancellation travel... Read More

What Type of Doctor Should I See Under My HSA?

You can withdraw money from your Health Savings Account (HSA)... Read More

About Accidental Death Dismemberment Insurance Quote

We don't hear much about getting an accidental death dismemberment... Read More

Are You Overpaying On Your Home Insurance Policy?

For many consumers the cost of daily living is becoming... Read More

Term Life Insurance and Permanent Life Insurance

Term insurance and permanent insurance are two basic types of... Read More

Reducing Soaring Insurance Claim Costs

With the soaring rise in claims to insurers from their... Read More