Understanding Life Insurance – Investing Money While Protecting Your Family
Life insurance is something that is misunderstood by many people. Right from the offset many people simply don't understand what the purpose of life insurance is and they question why they would want to get paid lots of money after they've died and are no longer around to enjoy it. Of course that's not the point of life insurance, and not the point at all. The point of life insurance is that this money is not for you, rather it is for your family after you've gone and are not around to support them anymore. If normally you are responsible for putting food on the table, then you need to make sure that that food is still going to be there once you're no longer able to put it there. Likewise, even if you aren't the breadwinner and you're a stay at home Mum, you need to ensure that your partner isn't forced to work every day and leave the children to fend for themselves when you're gone – or at least help them to afford some care during the day.
Even if no one is reliant on you financially, you may still decide to take out life insurance or to take it out on someone else's behalf. There are many reasons for this. For instance you might opt to take out life insurance as a way to be able to afford the funeral that you want. As a Mother for instance you might take out life insurance for your children and this is a good way to ensure you can afford to pay for their funeral in case such a terrible situation should ever arise. Likewise if you are elderly you might take out life insurance just to leave something behind for your loved ones.
There are many situations then in which life insurance is useful, and it's important to ensure that you choose the right insurance for your family and for your particular situation. There are many different kinds of life insurance which suit different purposes. Here are some.
Fixed Term Life Insurance: This is life insurance that will last for a certain predetermined amount of time. In short, after the term has finished, you will no longer have to pay into the policy and you will no longer be covered should anything happen. This is very useful if your reason for taking out insurance was to support your children, as it will mean you only pay the insurance until they have left home.
Decreasing Term Life Insurance: This is life insurance that gradually decreases in value over time – you pay less as time goes on, and the amount that will eventually pay out decreases also. This is most useful for people who want to ensure their families have the resources to pay off a mortgage – as your policy will decrease in value as the amount left to pay also decreases.
Increasing Term Life Insurance: This is life insurance that increases in value, and is most useful for people who know they definitely want to provide for their families, and who are elderly (as they will be more likely to die as they get older of course).
Whole of Life Insurance: This is life insurance that remains at a fixed rate permanently. Again useful for those who want to leave something behind for their loved ones regardless of their life situation.
Life Assurance: Assurance is like life insurance, but it invests some of your money into stocks and shares. Some of the interest generated here will be added onto the payout, and if you don't end up claiming on your policy then you will get to enjoy some of that investment while you’re still alive.
Brian likes to writes on finance/law topics. He writes articles on www.CarInsuranceQuotesOnline.co to help folks with insurance problems.