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How does life insurance work?

life insurance

Life insurance is a contract between you and an insurance company. You agree to pay for the policy and the insurer agrees to pay money to your beneficiaries if you die. They are several types of life insurance. Here is how to choose the right one for you.

Why is life insurance needed?

Life insurance is needed to ensure that the family members of the insured have some financial support in case of his demise but also to help create a savings plan for the insured’s future.

What types of life insurance can I get?

They are three main types of life insurance to choose from. First of all, the life insurance that provides money following the death of the policyholder. Then, there is the critical illness insurance that provides a lump sum payment if the insured person suffers a serious illness or injury that’s covered under their policy. Finally, the disability policy that provides a lump sum benefit payment if the insured becomes permanently disabled and is unable to work.

How much does life insurance cost?

Costs vary greatly based on the level of risk a insurer considers you to be which considers factors such as your age, how much you smoke or drink, your health, your occupation, your gender and how much you’re insured for.

How much life insurance should I buy?

To determine how much coverage you need, put together a list of your financial obligations such as your mortgage, credit card, loan debts and even everyday household expenses. Consider the costs necessary to fulfill your funeral or burial plans.

[Photo: carterinvestments.com]