What is life insurance?
Life insurance is a financial product that protects your loved ones, giving you and your family peace of mind. Life insurance is an agreement between you and the life insurance company. The life insurance company agrees to pay a sum of money to your beneficiary if you die from natural or accidental causes. In exchange for this long term insurance cover the policy holder agrees to pay a predetermined monthly fee called a premium.
A life insurance policy forms the basis of protection and financial stability after one’s death. Life insurance helps beneficiaries financially after the owner of the long term insurance policy dies by settling outstanding debts and taking care of your dependents in your absence. Premiums could be aggregated meaning they start low and increase every year based on your age. Premiums could also be fixed meaning that they start low and increase every year by a fixed percentage, or premiums could be level, meaning that the premiums stay fixed from the first day to the last day that you are covered.
What are the advantages of having life insurance?
Because you cannot predict the time of your death the best time to get life insurance is now. The earlier you start building up life insurance the better because it becomes more cost effective. In addition, if you are young and still in good health, you will not be penalised because of extra risks associated with certain conditions that might develop later in life.
The amount of life insurance required varies by age and individual circumstances.
