It Takes a Community for Insurance to Work

Insurance works | If you’re like some people, you probably have insurance for everything under the sun—your car, your home and maybe even your cell phone. But do you have insurance on your life?

Did you know that only 60% of Americans have some type of life insurance? That includes term life insurance, permanent life insurance or even the group life insurance offered through a plan from their employer. That’s a pretty shocking statistic when you consider that, statistically, 100% of us humans on the planet are going to die one day!

How Insurance Investment Works

Insurance Work

When it comes to making a solid investment, most people overlook life insurance as a viable option. They still view it as something of a save-it-for-a-rainy-day fund. What they don’t realize, however, is that there’s so much more flexibility in insurance policies today and that it is a worthy investment option.

What if you can actually reap and enjoy the benefits of your insurance as an investment component while you are still in the pink of health? What if you don’t have to meet an unfortunate accident—or worse, untimely demise—before you can get the payout from your life insurance? 
It sounds so much better than the traditional model of life insurance policies, doesn’t it? Fortunately, it is an actual option that you can take nowadays. Thanks to insurance policies doubling as an investment portfolio, you not only get to enjoy comprehensive financial protection for you and your family, but you also acquire a lucrative and sound financial investment. 

Invested in Insurance

For most people, investing their money in life insurance feels like wasting it because they won’t be able to use it when they pass anyway. In a sense, it’s like digging a hole in your backyard and regularly putting money in it for savings. The money may be safe, but it doesn’t grow in value nor can it be easily accessed when need be. 
The kind of investment that people want instead is something that they can eventually enjoy for whatever purpose they may deem fit. They want the money that is easily accessible and grows in value over time.

Basically, for insurance policies that double as an investment, otherwise known as insurance investment, part of your premiums eventually becomes investments after a certain period. As the value of your premiums grows, so does your investment. While your insurance premium remains to be untouchable and dedicated exclusively to the items listed in your policy coverage, you can dip your hands into your investment funds once in a while. 
This is a great option to have especially if you ever need emergency funds, including additional money for your children’s schooling, your retirement, or even if it’s just for your much-deserved vacation. The only condition is that you keep your premiums intact and that you don’t withdraw in excess of your policy’s minimum value. 

Advantages and Benefits

The first thing you should keep in mind is that this kind of setup will only work if you get a permanent policy. There are temporary ones that you only need to pay for a certain amount of time, for example, 10 years at a time, after which your policy matures. If you want to maintain the coverage, then you’ll need to renew your policy. This is not only tedious but also hardly provides any financial advantage for you. 
On the other hand, a permanent policy is maintained for as long as you keep paying for the premium. The longer you maintain it, the higher the returns. And, if you invest in a policy that covers an investment component, you can eventually diversify and repurpose this for other financial ventures. Again, the only condition is that you only access those in excess of your premium’s value so that you don’t forfeit your coverage. Read more

Once you sign on the dotted line and start paying monthly, what you’ve really bought is a peace of mind—the peace that you’re providing financially for your loved ones even after your death. Life insurance exists for the unthinkable—the death of you or your spouse. It will cover loss of income, funeral expenses and other financial needs that might come up after you pass away.

What is term life insurance and how does it work?

Life insurance serves as a cornerstone of your financial plan because it protects what matters most — the ones who you love, and who depend on you to provide for them. It is important for anyone with financial dependents to have life insurance, whether that be your young children or a partner you share a mortgage with. The life insurance beneficiary (or beneficiaries) can use the policy’s death benefit to help cover funeral expenses, meet day-to-day living expenses or plan for the future.

When shopping for life insurance, you’ll quickly learn that there are several types of coverage to choose from. Term life insurance is a popular choice because it’s a simple, affordable type of coverage that covers your family during the years they need it most.

Learn more about term life insurance to determine if it’s the right fit for your needs.

How does term life insurance work?

Other than being one of the most affordable types of life insurance coverage, term life insurance is a rather simple, straightforward product that provides protection for you and your family for a set period of time.

The key characteristic of this type of life insurance is right in its name — the term length of the policy. That’s the number of years the policy provides protection for your beneficiary or beneficiaries. Common term lengths are 10, 15, 20 or 30 years. If you were to pass away during the term of your coverage, the life insurance payout of your policy, known as a death benefit, would go to the beneficiary or beneficiaries you designated.

Depending on how your beneficiaries choose to use it, the death benefit can help pay the rent and/or mortgage; your children’s education; help pay lingering debts, and in the event of your death, can help those who are mourning your loss to address financial needs and worries during a difficult time. That death benefit is often free from income tax, too.

Term life insurance can provide coverage during the years families may need it most. For example, a parent with young children may want life insurance coverage that lasts at least until the kids finish college. Or a couple that just purchased their first home may choose a term length that lasts until their mortgage is paid off. An online life insurance calculator can help you figure out what term length is right for you.

At the conclusion of the policy’s term length, you can either elect to have your life insurance coverage end or have it continue in increments of one year, which is available due to guaranteed renewability. However, your life insurance premiums will be much higher at that time. That’s why it’s important to buy the right amount of life insurance coverage from the start or another, the smaller policy when your needs change. It’ll save you money in the long run instead of needing to extend your life insurance coverage later in life.

How do you know if you need term life insurance?

If you have people in your life who are financially dependent on you, then you probably need life insurance. This means:

  • You share financial obligations with a partner or spouse
  • You have children or plan to have them soon
  • You have family members who rely on your income to pay their bills
  • You have cosigned debt — like private student loans — and a cosigner who would be on the hook for them
  • Or, you want to leave behind a financial legacy to your loved ones to help with burial expenses or to make life a little bit more comfortable

There are various other scenarios where people choose to buy life insurance, but these are some of the most common. Fundamentally, life insurance is purchased so that the policyholder has the peace of mind that their beneficiary or beneficiaries will be financially protected if anything were to happen to them. Read the full article here

Deciding to purchase life insurance to help protect your family is the best decision that you can make, but it can get complicated when it comes to answering the question, how much life insurance do I need? There are several ways to figure out the range of life insurance quotes you should be considered based on your specific life situation that can make choosing coverage easy.

How Does Term Life Insurance Work: Everything You Need To Know In One Place

I’m sure that you can agree with me when I say that term life insurance seems to be extremely hard to learn about and even more frustrating to purchase.

But is it?
 
It turns out that term life insurance has a framework that doesn’t change and once you learn it, you will be able to easily answer the question of how does term life insurance works, and in general, it will be easier to understand and buy.

In this guide today I am going to go over exactly what term life is, how it works, and how to use this information to get the best term life insurance quotes. 

The History Of Term Life Insurance

I think it’s essential to understand why something came into existence to understand its primary purpose.

If you do some basic research, term life insurance is characterized by its low premiums and high coverage amounts, but where did term life come from?

The first life insurance policy was taken out in 1706 by a company known as the Amicable Society for a Perpetual Assurance Office, also considered the first life insurance company in the world.

I know the name is a bit long-winded; however, I guess back then, long and complicated names were in vogue.

This insurance carrier focused mainly on insuring only its members who were between the ages of 12 and 55 years old.

At the end of the year, the insurance company would divide the share of the “Fees” to the wives and the children of the deceased men in proportion to a number of shares in the company they owned.

This means no one really had to answer the question of how much does life insurance cost.

Since this company wouldn’t insure people over the age of 55, another insurance company was formed in 1755.

This company was formed by Edward Mores, with the name The Society for Equitable Assurances on Lives and Survivorships.

I know, this name didn’t get any better either:

Mores was the disciple of James Dodson, who passed away before “Equitable” could be fully established.

Even though Edmund Halley wrote the first mortality table or an actuarial table (as seen below) in 1693, you know, the guy, who computed the orbit of Halley’s Comet.

The math tools for such a formula weren’t available until the 1750s which allowed for the development of modern life insurance. 

In 1762 Equitable became the world’s first mutual insurer and it pioneered age-based premiums.

These premiums were based on mortality rate which in-turn created the framework for the basis of modern life insurance upon which all life insurance systems are subsequently based.

That’s why you are able to get cheap life insurance when you are younger.

Mores also introduced the position of an actuary— it was the earliest known reference to the term as a business concern.

The first modern actuary was William Morgan, who was appointed in 1775 and served until 1830.

Term life insurance sales in the USA didn’t start until around the late 1760s. Read more here

A Lot Contribute Because All are At Risk

Peace of mind is perhaps the most important intangible benefit associated with purchasing an insurance policy. It gives you the reassurance that you’re leaving behind financial protection for your loved ones. The beneficiary (or beneficiaries) can use the policy’s death benefit to help cover funeral expenses, meet day-to-day living expenses or plan for the future.

Understanding how an insurance policy payout works is critical to making sure that you have enough coverage to meet your loved one’s financial needs. But it’s also important for the policy’s beneficiary to consider how insurance proceeds will be used, should the need arise.

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