Life insurance is one particular seemingly complicated concepts which can be grossly misunderstood by many individuals and surrounded by misconceptions Life insurance. If you've never considered taking out a policy, it's about time you did. Because as it turns out, life insurance is a pretty straightforward contract between someone and an insurance company. Here are five basic facts that will help clear any misinformation.
Life insurance is a financial plan, no investment
Some brokers advertise life insurance as an investment opportunity. No kind of coverage or policy can allow you to build your wealth, not even those with a money value. Think of life insurance as a financial security plan or retirement plan, no investment or business venture.
Term vs whole life insurance
You will find various types of life insurance policies, but each of them generally fall under either term or whole life insurance. Term life is a policy you buy for a specified period, usually between 10 and 30 years. Life time is a life-long policy with a money value.
Life insurance is surprisingly affordable
Many individuals shy away from life insurance policies simply because they assume that the premiums are too expensive. Well, that's just not true. In accordance with Finder, a healthy middle-aged Australian can pay as little as $4.40 per week for a $250,000 insurance policy. Most policies may be even much cheaper for them at a age.
A life policy may be much more
The key intent behind life insurance would be to secure your beneficiaries' financial future after you're gone. But it could be much more than that. For instance, most insurers include optional life insurance riders within their policies to cover financially straining situations such as disability, loss in income and terminal illness. You can also utilize the cash value of to secure loans and other financial perks.
Your credit score might not affect your life insurance premiums
Statistically, individuals with low credit scores are prone to file insurance claims than those with high credit scores. In some cases, insurers regard a low credit score as a high-risk factor, which regularly results in higher premiums - as an example, when buying car or home insurance. But as it pertains your insurance, things certainly are a bit different.
Even though underlying rules, guidelines and requirements can vary greatly between companies, the credit score generally has little if any influence on life insurance terms. Insurers typically focus more on life span than the client's credit history when calculating premiums.
Also, filing for bankruptcy might not affect your policy either. However, if you apply for a lifetime insurance right after filing for bankruptcy or with several bankruptcy cases on your record, the insurer might have the ability to limit your coverage options.
It's for all
Life insurance is not merely for seniors and retirees. Anyone can take out a policy, including children. Insurers evaluate insurance applications on a case-by-case basis. Every policy's terms and premiums are personalised to an individual's status, such as age, health history, dependants, financial situation, and the ability to pay the premiums. Irrespective of your actual age, health condition or job situation, there is a policy for you.
Hopefully, these few facts help reveal everything you should expect when buying your first policy. You are able to always keep in touch with an insurance agent to have all of your questions answered before buying a policy. Additionally, if you're unhappy together with your current policy, you can find ways to conveniently switch things around to accommodate new preferences.
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