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Understanding Life Insurance Policies and How They Benefit Their Holders

Tuesday, March 27th, 2012

There are many ways to invest when one is working and planning for a comfortable future. A good investment makes one independent and capable of facing any emergencies especially those requiring financial help. With many options available in the market it is very important to choose wisely and to invest in a way that is free of complications when the money is due and in a manner that will reward substantially. A good way to invest has always been an insurance policy. With the many options available with these policies like accident insurance, education insurance and even life insurance policies finding one that will allow you to comfortably pay the premiums which will have  long term benefits.

Among all the policies a life insurance policy is popular because it allows the policy holder to plan a financial benefit for the family in the event of the policy holder’s death. There are term policies that last for a certain term and are popular because their premiums are also lower and the beneficiaries will receive the assured sum on the death of the policy holder during the term. A Long term plan can either pay a lump sum upon death or there are those that will pay a certain assured sum to the policy holder at the end of a fixed number of years even if the holder is alive. There are policies that have decreasing term policies where the payout also decreases and increasing term policies where the payout is larger and so are the premiums.  What needs to be done is to sit down with an insurance professional and discuss the various policies on offer and to shortlist those that suit you financially.

A joint policy is recommended for a couple where the policy will pay the surviving spouse on the death of one spouse. This is called a single joint policy. This works out cheaper to afford than two single life insurance policies. These policies all have options that can be used to benefit the policy holder with extended terms and options to pay a higher amount for better coverage. A joint life Insurance policy will lapse after the first death. The surviving spouse will have to buy a policy at higher premium as single policies for older and retired clients will cost more. Now, there are policies that have clauses that cover major and critical life threatening illnesses. Diabetes, cancer, heart problems, Blood pressure all have policies that cover the eventualities of these illnesses causing death. Here again the beneficiary can get a lump sum if the illness is covered by the policy. These policies carry a higher premium and can work out to be more affordable if they are taken as an add-on policy to an existing one rather than as a single policy.

Purchasing a policy carefully and at the start of your career is beneficial as the younger a client is the better are the premiums available for long term policies. The main impediment stopping more people from buying life insurance policies is a casual approach towards their own demise. As a life insurance policy is not tangible many people don’t have the foresight to see its benefits. Among the major pluses of a Life insurance policy is the fact that small amounts saved every month or paid yearly can help in the future with a decent benefit. Some long term policies do pay out a sum assured when the policy has been running for many years. With a good tax rebate owning a life insurance policy will also give you great peace of mind.

It is normal to feel confused about the most suitable policy and its benefits when you are looking to invest. One way is by checking out the sites of all the major players in the market. With the accessibility of the internet it is now so much easier to get information online about various policies, their features and the additional services that the company offers. With competition among various policies of different companies it is possible to get a great policy at premiums that you can afford. Online checking can also help you to compare these different policies to find a suitable one for yourself. Online sites also have their customer service and professional representatives who are qualified to help you with their policies and can answer all the queries that you have. There are also independent consultants available online who will advise on the best policies to suit individual clients depending on their health, lifestyle and income levels. Most consultants will advise that you take on a policy that will be equal or higher than all your debts and this will include mortgage and other loans as well. This way there is the assurance that the family is spared the burden of paying of any debts accumulated over the years.

A beneficiary is chosen by the policy holder and could be anyone from the family or could even be more than one person. In this event the amount is divided by the number of people who stand to inherit the amount. Children who are underage can have the money in an account or transferred to an education policy that can be used later. Some policies have features that allow the policy holder to borrow against the life insurance policy. This could be a big help if you need money urgently like to pay for someone’s hospitalization, to pay for a home or even for college or course fees. In the event of the loan amount not being paid back this is then deducted from the total amount that is paid to the beneficiaries after the policy holders death provided the premiums are regularly paid. Borrowing from the life insurance policy must be done only is extreme circumstances so that the benefit to your family is not affected.

This was just a way to bring out many of the benefits of life insurance policies. This is definitely a worthwhile investment has long term benefits.

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