Insurance for newbies: Everything you need to know about life insurance

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There are various kinds of insurance coverage, but one of the most sought is life insurance. This is coverage set for you but is for the benefit of listed beneficiaries. Breadwinners, parents or older siblings are typical individuals who get this coverage.

So if you’re considering getting life insurance, below is everything you need to know about it.

What is life insurance and how does it work?

Life insurance is a contract between an insurance policyholder and an insurance company in which the insurer agrees to pay a quantity of money in exchange for a premium upon the demise of an insured person or after a specific amount of time.

For the contract to be valid, the life insurance application must precisely list all of the insured’s past, present, and high-risk activities.

The reason why this is commonly sought by parents, breadwinners and the head of the house is that life insurance acts as financial support for their family when they pass. But you can’t help but wonder “why don’t they just make a savings account for their loved ones?” The great thing about life insurance is that it’s tax-free, unlike banks.

Life insurance replaces your income and helps your family maintain their quality of living and provide for your dependents.

What affects my life insurance premium and costs?

Some factors affect your life insurance coverage since not everyone has the same health situation. Your insurance company will require you to provide certain information when applying for life insurance. Here are factors that can influence your coverage:

  • Age – The highest risk factor for the insurance agency is life expectancy, making it the most significant component.
  • Gender – Since it’s statistically proven that women live longer than men, this means their coverage will cost less.
  • Overall health – The majority of policies and medical examinations involve screening for diseases as well as other relevant medical metrics that may suggest risk.
  • Smoking – Smokers run the risk of developing a number of illnesses that might shorten their lives and raise their risk-based insurance costs.
  • Driving record – If you have records of drunk driving or moving violations, this can potentially affect the cost of your premium since the risk is higher.
  • Family’s medical history – Another indicator of your level of risk is through family medical records. Since the likelihood of you getting it is higher.
  • Lifestyle – Of course, your lifestyle also plays a role. For instance, if the nature of your work is considered ‘high risk’, then your coverage may cost more.

Who needs life insurance?

Life insurance is made for dependents to maintain their way of living even after their source of income passes. Here’s a list of individuals who need this coverage:

  • Parents with minor children (individuals under 18)
  • Parents with dependents that have special needs (no age required)
  • Seniors who wish to leave money to their children that provided them care.
  • Individuals who pay for property together.
  • Spouses who don’t work.
  • Individuals whose parents co-signed a loan for them or accrued private student loan debt.
  • Young individuals who do not yet have dependents.
  • Companies with key employees
  • Prosperous households who anticipate paying estate taxes. 
  • Individuals with pre-existing medical conditions.
  • Married pensioners.
  • Families that can afford burial services and expenses.

How do I get life insurance?

An efficient way to get life insurance is by seeking an insurance broker. These are trained professionals that specialize in insurance and risk so you can count on them to know what you need or how to get what you need.

If you’re new to insurance you might get flustered with the terms, regulations and processes but an insurance broker can make it all understandable and easy. They’ll help you understand every single detail of your policy, down to the last dot.

They can even offer you quality advice, offer you a variety of policies, help you file claims in the future and even help you alter and come up with your insurance coverage. And also, consider a reputable, credible and reliable insurance company to prevent getting scammed or even getting low-quality coverage.

Take away

Now you know the gist of what life insurance is, it’ll be easier for you when you do get coverage. You’ll know what life insurance policies you can get, what will affect your premium when you need to get life insurance and so on.

Put your new-found knowledge to good use and get yourself quality coverage that’s perfect for you and your family. 


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