Whole Life Insurance Explained
We live in a fast-moving world. We are so busy with our day-to-day happenings that we seldom find time to give to ourselves. Most of our time in life is spent in creating a safe and secure future for ourselves and our family. It is ironic that we seldom find time to secure our family’s future, in case we are caught in some fatal calamity.
Life insurance takes care of our family’s future in the wake of any untoward incidence. There are many types of such policies today. One of the most commonly bought policies is the whole life insurance policy.
It is a policy that generally pays a lump sum in the event of the death of the insured to his/her dependents. In some cases, the earlier diagnosis of a critical illness also results in the said payment. The only requirement is that the policy is kept in force with the required payments being made in time. This policy is sometimes called straight life insurance policy or permanent life policies.
These like every other policy depend wholly on the premiums. There are different ways in which the insured can pay the same. Some policies have a single premium or a fixed periodic premium, or sometimes, it can be paying a lump sum amount in a flexible period.
Apart from covering the risk of life, these policies are also sane and safe investments. If the insured decides to cancel the policy midway, he will be paid in full, whatever premiums he has paid till that day. Thus, this insurance type is indeed a way of making some tax free savings.
Reasons to Consider This Option
Whole life policies are different from those of term insurance. The latter is for a set time, and the insured is paid a lump sum amount after the end of the term of the policy or if he expires during this term. Depending on the type of policy, he may get certain bonuses.
However, under the former policy, either the dependents get a lump sum amount in the case of death of the person who is insured, or at the diagnosis of a critical disease. This system is actually more preferable, because a set amount of money is guaranteed even after the death of that person.
The insured cannot claim in the case of death after the term of the life insurance policy, nor can the policy be encashed. Simply put, such a policy covers the risk of death only till a set period of time. The whole policy, on the other hand, covers the same at any given time.
One should do careful research regarding the various policies and their features, benefits, and returns. One should also think about his or her financial capabilities before opting for any higher-end policy. One buys it for coverage of risk at an economical and affordable rate. If you have to work harder or more to cover such a policy, you have lost it.
One can find out about the various policies, either online or by calling up the company itself. Although life insurance is a non-tangible commodity, it is extremely necessary, and it is never too early or too late to opt for an affordable policy.