Life insurance is a type of life insurance where the terms of compensation are based on the survival or death of the insured. As in all insurance business, life insurance is concluded with the transfer of the risk of death of the insured person to the insurer, who will pay the premium in case of death of the insured person in accordance with the terms of the insurance. The special feature of life insurance is that it is the risk of survival or death of the insured that is transferred.
Who needs life insurance? According to the normal ethics of life, people will eventually come to death, and life insurance can be described as protection for the last moments of life. In other words, the insured will receive the money. People are often hesitant to choose a type of life insurance without knowing about it. So, how should most people choose a life insurance policy that is cost effective and suitable for them?
There are two more common types of life insurance, one is term life insurance and the other is whole life insurance. According to the above reasoning, the price of whole life insurance will be higher than that of term life insurance. Therefore, those who have an adequate budget and seek wealth inheritance are more suitable for whole life insurance. A whole life insurance policy can designate the beneficiary of the policy, can be distributed exactly as the insured wishes, and is exempt from estate tax and protected by law. In contrast, term life insurance is much cheaper and more suitable for limited budgets and young families. Some people may question the need for a term life insurance policy, why would you need a life insurance policy in addition to critical illness and medical insurance coverage? If the insured person is the breadwinner of the family, and if something happens to the insured person, the family's daily expenses will be hit hard, and the mortgage, children's schooling, etc. will be another heavy blow to the family. A term life insurance policy will help the family through the most difficult times, as the compensation from the life insurance policy can support the basic expenses of the family. Simply put, term life insurance provides coverage at a fixed premium for a period(usually 10, 15, 20 or 30 years) and expires at the end of the policy. Term life insurance is designed to provide effective monetary protection in the event of a person's unexpected death. Permanent life insurance, on the other hand, has no time limit and the policy expires when the claim is completed.
Also, the price of life insurance will depend on the risk rating of the policyholder. The higher the risk rating, the more expensive the premium. Risk factors considered for life insurance are age, gender, health, whether they smoke, job/hobbies, etc. Overall, for young families, consider purchasing term life insurance for the breadwinner of the family. For others, with an adequate budget, whole life coverage will provide greater peace of mind.
