What is Life Insurance?
A policy that will pay a specified sum to beneficiaries upon the death of the insured.
It is a protection against the death of the insured in the form of payment to a designated beneficiary, typically a family member or business.

Suppose say, you are the only member working and earning for your family, and if something happens to you, what will happen to the family? Will they have enough money for your funeral, child care, children's education, etc.,

So the most important reason for life insurance is to protect your family by making sure that they have enough money if something happens to you. Life insurance is the foundation of a sound financial plan. It provides financial security for your family by protecting your financial resources, such as your present and future income, against the uncertainties of life. More specifically, life insurance provides cash to your family after your death. This cash (the death benefit) replaces the income you would have provided and can meet many important financial needs: It can run the household, send your kids to college, and ensure that your dependents are not burdened with debt.


How does Life insurance work?
Each year, you pay the insurance company for your insurance policy, this money is called a "premium." You also tell the insurance company who should get the insurance money if you die (a process called "naming your beneficiaries"). Then, if you die while your policy is active, the insurance company will pay your beneficiaries of the insurance money.


Why should you buy Life insurance?
Life insurance protects your family in case something happens to you. Most people buy life insurance to make sure that their family still has enough money to take care of things after they die (like debts, health care). If you buy "permanent" life insurance you can also save money for the future.

In general, life insurance falls under two categories namely, Term insurance and Permanent insurance.

Term insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. Some term insurance policies can be renewed when you reach the end of the term, which can be from one to 30 years. The premium rates increase at each renewal date. Many policies require that your present evidence of insurability at renewal to qualify for the lowest rates.

Advantages:
Initial premiums generally are lower than those for permanent insurance, allowing you to buy
higher levels of coverage at a younger age when the need for protection often is greatest. It’s good for covering needs that will disappear in time, such as mortgages or car loans.

Disadvantages:
Premiums increase as you grow older. Coverage may terminate at the end of the term or become too expensive to continue. The policy generally doesn’t offer cash value or paid-up insurance.

Permanent insurance provides lifelong protection. As long as you pay the premiums, the death benefit will be paid. These policies are designed and priced for you to keep over a long period of time. If you don’t intend to keep the policy for the long term, this may be the wrong type of insurance for you.

Some of the features of this policy are
You can cancel or surrender the policy in total or in part and receive the cash value as a lump sum. If you surrender your policy in the early years, there may be little or no cash value. If you need to stop paying premiums, you can use the cash value to continue your current insurance protection for a specified time or to provide a lesser amount of protection covering you for your lifetime.
You usually can borrow from the insurance company, using the cash value in your life insurance as collateral. Unlike loans from most financial institutions, the loan is not dependent on credit checks or other restrictions. You ultimately must repay any loan with interest or your beneficiaries will receive a reduced death benefit.

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