Before purchasing life insurance, you need to know certain points that could help you make a better decision. What is the policy of this type? what are their characteristics? What kind of coverage can you get? Find everything you need to know in this complete guide.
More than 80 million Americans have taken out life insurance that protects them against death or disability.
That’s right because of the peace of mind that this type of coverage can give you and your family is very important in the event of a drastic event such as death or a serious accident.
However, before signing policy of this type, it will be necessary for you to fully understand how they work and what their characteristics are.
Let’s review everything you need to know about life insurance below.
What is life insurance?
In case you still do not know, life policies are a type of economic insurance whose purpose is to cover, as agreed in the contract, the needs of the beneficiaries in the event of the death of the insured person or accident with disabling consequences for the same.
What types of insurance are there?
There are several types of Life insurance. They are:
Life Insurance Risk
This type of insurance offers coverage in the event of death. That is, the beneficiary of the policy will receive the capital set in the contract at the time the subscriber dies.
Within Risk Life Insurance, there are two modalities:
- Whole Life Insurance: This consists of the payment of the premium being made immediately after the death of the insured.
- Term Life Insurance: which consists of covering the risk of death during a specified period of time and previously stipulated in the policy.
Life Insurance Savings
This type of insurance offers life coverage, that is, the insured will be the one who receives the stipulated capital if he lives on the date of fulfillment of the policy.
It could be compared to a long-term deposit since the insured is responsible for paying a monthly or annual premium and then collecting it with a fairly low-risk percentage.
It is important that you know that Savings Life Insurance is used quite a bit to supplement the retirement income.
Mixed Life Insurance
There is also the Mixed Life Insurance, a formula offered by some companies in the country and which offers coverage of the two types of policies mentioned above.
At what age should life insurance be purchased?
Although, as a general rule, the age range to take out life insurance is between 30 and 50 years old, everything will depend on your personal situation.
If you are twenty years old but you are married, you have a child and you also pay a mortgage, the ideal thing is that you think about taking out insurance of this type.
It is important that you know that insurers maintain entry limits from 18 to 65 years. Sooner or later it is very likely that they will reject your request.
In any case, at any time you can review your Life insurance and reevaluate its conditions.
Is there a mandatory amount to insure?
The truth is that there are no impositions of any kind regarding the amount to be insured, as this will depend on each person and the needs they have.
Remember that life insurance is an economic coverage that will allow you or your family to supply the source of income that is altered either by your death or by finding you in a state of disability.
In this sense, the amount to be insured should cover at least the amount of the mortgage and loans that are maintained on the date of subscription of the policy.
Many connoisseurs and the insurance companies themselves advise opting for insurance that covers the five-year salary and future education expenses of the children.
If you want to save on your Life insurance you should compare the market offers and evaluate the conditions of each one.
Who can be the beneficiaries of life insurance?
The beneficiaries of any type of life insurance will be those persons designated by the policyholder at the time of signing the contract.
If you are thinking of subscribing to a policy of this type, you have complete freedom in choosing the person or persons who will benefit from the premium.
Also, don’t forget that you can change the beneficiary of your Health insurance at any time.