a) To protect a household from the severe financial crisis that corresponds to loss of income on the untimely death of the primary bread earner of the family.
b) It also protects the estate of the insured from any due payments at the time of his death
c) It can be used as a way to provide for retirement savings
d) Some business owners like to insure the lives of their key employees to safeguard the business from any losses due to the untimely death of these employees
There are several other reasons why you would want to buy life insurance but the ultimate aim is to insure against the financial loss of a key individual.
When planning to purchase life insurance policies, one should take into consideration the various life insurance policy types that are available.
Term life insurance is a policy that is simple to understand. It has the simple objective to pay a lump sum amount at the untimely death of the insured. Say you take out a policy of $100,000 on your life, the insurer will be liable to pay $100,000 to your beneficiaries on the event of your death.
A whole life insurance policy, on the other hand, involves the financial benefit on the event of your death together with a cash value account which accumulates a cash amount with deferred tax implications. A whole life policy charges the same premium throughout the lifetime of the insured as long as the policy premium is paid. It allows you to get benefits in the form of dividends from your cash account or even be allowed to set it off against the premium due.
There are several online life insurance quote calculators which offer the option to calculate the premium payable when you enter your choice of policy and other details. Although this may not be 100% perfect as certain conditions like pre-existing health issues etc still need to be checked before the policy can be bought but they are useful in terms of providing the approximate amount of the premium.
