Have you ever wondered why it is essential to have life insurance in 2022? Why do so many people around the world attach importance to having a life insurance policy above all else?
There are many reasons for that. Perhaps the primary reason is that we live in an extremely fast time where technology has taken precedence, and everything has somehow become rapid, uncertain and unsafe.
Having life insurance is essential today for a handful of reasons, especially for the whole family we’re going to write about, but let’s first see what the term “life insurance” itself means, shall we
Life insurance – get to know the real meaning of it.
At its core, life insurance represents a legally binding contract responsible for paying a death benefit to the owner of the policy once the insured dies. Life insurance is a contract between an insurer and a policy owner.
It guarantees that the insurer pays an agreed sum of the money beneficiaries that are named in that policy, in case or when the insurer dies, in exchange for premiums that policyholders have paid during his lifetime. For the contract to be 100% valid and enforceable, life insurance applications must disclose the insurer’s past and all high-risk activities.
Contacting a life insurance company
A life insurance company that’s often supervised by relevant authorities such as FINMA, for example, should be contacted immediately following the death of the policyholder who’s insured. It’s necessary to do so for claims and the whole payout process to begin.
Everyone must keep in mind that the primary purpose of a company of this kind is to provide dependants with a financial benefit upon the premature death of an insured person. The policy pays a “death benefit” to the named beneficiary, which is a specified amount, once the insured person dies.
What are the types of life insurance?
There are some principal types of life insurance, such as:
- Whole life: It accumulates the cash value, which allows the policyholder to use that cash for many purposes.
- Universal life: There’s a type of permanent life that includes life insurance with a cash value component responsible for earning interest. Thus, universal life features flexible premiums. These premiums could be adjusted over some period.
- Indexed universal: One specific type of life insurance allows policyholders to earn an equity-indexed or fixed rate of return.
- Variable universal: In this type of life insurance, the policyholder is able and expected to invest the policy’s cash value in a separate account. In addition, variable universal insurance includes flexible premiums and can be designed with an increasing death benefit or a level of the death benefit.
Conclusion
Having life insurance, in addition to the worst outcome, is also beneficial in case of accidents and dire situations. This means that you always have a backup plan if something unexpectedly wrong happens to you and will not suffer (significant) losses financially.
Be responsible to yourself and your loved ones in the family and seriously consider the option of life insurance with a verified and authorized company. It will be more than essential for you to in the future! Good luck!
