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What’s a Life Insurance coverage and how it works

What is a Life Insurance coverage?

Life insurance is a financial product that can be purchased for the purpose of protecting and financially supporting your family from the moment of your death, by providing the money that replaces your salary. In many cases, life insurance is purchased to cover other types of debt, such as a mortgage or children’s college tuition. While it is hoped not to need it, life insurance provides greater security in the family environment, and this is especially true for families with children to care for.

In choosing which life insurance best suits their personal needs, the policyholder will first have to consider whether to opt for a Term insurance or Permanent insurance. The first is sold with terms set for periods of 10, 20 and 30 years, after which a new policy must be requested. The premium to be paid for a term insurance is usually lower than for a permanent type of cover, which pays for the entire life of the policyholder. Permanent life policies give an additional benefit to the owner, the cash value of the policy, which can be borrowed or withdrawn from the policy. Summarizing, term life policies can be very affordable compared to whole life insurance.

To make an optimal choice, we recommend following some basic steps. Having made the choice between a term or permanent policy, you will have to assume the amount you want to guarantee to your family and the time necessary to accumulate it. Then you will have to contact an life insurance broker, who will indicate the quotes for the type of plan you have in mind. So make a comparison between the different solutions proposed, looking for the one that will best meet your expectations.

When is life insurance worth considering?

If your basic goal is to guarantee a future sum, in lieu of your income, for a specific period, then term life insurance may indeed be the best answer, because premiums are inexpensive for those individuals in good health. Let’s take a concrete example: if you are in your 30s, by purchasing a term policy, you could pay a minimum premium of $ 12 per month for a policy worth $ 250,000, lasting twenty years. If, on the other hand, you decide to take out the same coverage, but at the age of 50, expect to pay at least three times the amount, say $ 35 a month and up. However, permanent life insurance coverage is always more expensive than term life insurance coverage.
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