Today, millions of people own one (or more) life insurance policies. This popular type of coverage offers economic protections for loved ones in some situations. Frequently employment benefit packages include at least some level of life insurance coverage.
This insurance allows the policy owner to ensure that designated beneficiaries will receive a payment upon the policy owner’s death (under some circumstances). Typically a lump sum award, this money may help provide for the economic well being of a spouse or minor children, for example.
Who Requires This Insurance?
Most experts agree this type of insurance holds particular value for income earners with a spouse or young children to support. These dependents may face unexpected bills if a provider passes away unexpectedly. Since the premiums tend to rise significantly with age, people over the age of 65 rarely purchase these policies. However, young parents utilize this coverage to protect their children.
How This Insurance Works
Today, these insurance policies typically function as “”term coverage”” in effect for a specified, limited period of time. The insured pays premiums to maintain coverage in effect on behalf of named beneficiaries. The insurance company will pay a designated lump sum of money to designated beneficiaries if the insured passes away within the term period, as long as the cause of death falls within the coverage terms.
Different Types of Coverage
Different insurance policies supply variable levels of coverage. In general, young people seeking this peace of mind during their 20s and 30s stand a statistically less significant risk of dying than people in their 50s or 60s. As a result, individuals in the younger demographic usually obtain lower rates for this type of insurance. Most insurance companies also consider health issues and smoking as well as age in determining applicable premiums.
This coverage may enable a parent to provide for the economic well-being of surviving dependents in the event of death. If provides a way to pay for expenses a surviving spouse or child may have trouble meeting.