Every one in this world has the fear of death, we are all mortal and any thing can happen anytime. But we cannot think about this every time, if so then we cannot lead a happy live, we wouldn’t have married, have children or work hard in life to them a comfortable life. Life would have been monotonous and we would not enjoy the pleasure if we start thinking about death.
People always have the fear of death. Yes we cannot deny that this world is full of uncertainty and any thing can happen to any one at any time. A responsible person in life will always try to make some kind of arrangement for their dependants so that the can have a secured future. This was exactly offered by the life insurance a security for your family at your demise. Not only that, this gives a mental satisfaction that your family will not be into any trouble and will be secured after you leave them. People are unsure about the premature death and that is the reason they tend to go for a low cost life insurance that will provide them benefits and at the same time is affordable.
If you too are looking for low cost life insurance, do not bother about investment policies that promise to pay a certain amount of money after some stipulated period. These too are life insurance policies, but their main thrust is on building up your capital. They too provide death benefit, but the amount of the death benefit is actually meager in comparison to the amount of premium you will have to pay. Moreover, most of them are equity based and so neither the death benefit nor the sum assured is guaranteed. Everything depends upon market condition.
There are certain investment policy that gives you the guarantee on the amount that you would get at the stipulated time. But still they cannot be called low cost life insurance. Term life insurance is the true low cost insurance that gives you proper death benefits. Yes, these policies are not that attractive they do not offer you great perks. But that is all because of these policy being so cheap.
- Term life is valid for a limited term, not for the whole life.
- They do not provider cash value
The major draw back of term life insurance is the validity period of these insurance. They are valid only for a short term and you will get the benefits only if die within the active coverage period. If you die after the coverage period you will not get any benefits. On the other hand the entire investment policy offer benefits for the whole life. To be frank this is not a draw back, because you need the life insurance policy only for a period wherein if you die you need to provide financial assistance to you family. Once you have earned enough money, once you have closed all your debts or once your children start earning you do not need a policy.
The second draw back of the term policy is that there is no cash value. But if your main goal is to provide coverage to your family after you death then what is the need for cash value. In fact you should only be worries about the face value of the policy as this is the sum your family is going to get after your demise.
All the insurance policies have a face value, which is distributed as the benefit when the insured event takes place. However, some policies accrue cash value by investing a large part of the premium into stocks, bonds and securities. It is the amount, which keep accumulating inside your account and which you can take out after stipulated years by surrendering the policy. If you do so, you actually lose the life coverage and the face value. On the other hand, if you die while the policy is still in force, your beneficiary will not receive the cash value, but only the face value. In short, the cash value is for you and the face value is for the beneficiary. One cannot have both of them.
Before buying a policy you need to review the reason for having a policy. If you feel that you need an insurance to secure you family in case of premature death then you can just go for term insurance policy as you don’t need the cash benefits or the coverage for whole of you life. The other reason is the entire amount that you pay as a premium will go towards the death benefits and hence the face value will be more. If you look deeply the reason the term life insurance is low cost insurance life insurance is because most of the time the carriers do not pay the benefits. As these are short term insurance the probability of a person dying during the policy period is very less.
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