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Most people think of this kind of insurance as something to take care of your loved ones after your death. Actually, it can help you in case of other emergencies as well such as critical and terminal illnesses.
The first insurance of this type was used thousands of years ago. Ancient Babylon, as long ago as 5000 B. C. Had it in some form. The Romans had burial clubs that took out policies for funeral expenses as well as to aid the family after the death.
There are several different kinds and there are different benefits as well as premiums associated with each. Among the other factors you will want to consider besides the premiums are how the policy pays out and how taxes on your estate will be affected.
The amount of your premiums is also dependent on the amount of coverage you would like in addition to your health and age. Insurance companies need to look at how much risk they will incur by issuing you a policy and how quickly they will have to pay out is part of that. Your life expectancy will be reduced if your health is poor, if you are of an older age or if you have unhealthy habits such as smoking heavily.
Term insurance is a type that is temporary. It is taken out for a specific period of time and the premium does not change over that time. The policy does not increase in value. If the person insured should die during the time the policy is in effect, than the beneficiary or estate will receive the payout.
In the case of permanent insurance, as long as the premium is paid, the policy will continue to be in effect. It insurance comes in various types and two of the most common are whole life and universal life. There are different reasons why you might consider one over the other.
The main reason that whole life policies are advantageous is that the costs and benefits are known. The payout and cash values are guaranteed and the premiums are known. They are disadvantageous because the premiums are inflexible and the payout is not always competitive with other types of savings. If loans are taken against the cash value, they do not need to be paid back as they will simply lessen the amount paid on death.
The universal life type of insurance is intended to provide greater flexibility than you get with while life. There is a cash account that comes with it which will increase as you pay the premiums. These accounts also accrue interest. There is more flexibility with regard to the premiums and you can usually get a higher rate of return.
If you are looking for life insurance, do some investigation to better understand the types that are available. Then talk to an agent to determine which will be best for you. In many cases, you can get a quote online first and then talk to a representative further if you are interested.
