Online Life Insurance Information

Life insurance is an insurance policy that you buy to insure your life. Usually life insurance is seen as:

1. Means of protection of family after your death.
2. A wise method of financial planning.

Why life insurance?

The greatest advantage of a life insurance is that it reduces the financial risks to a great extend in the unfortunate event of death of the bread winner of the family. If enough cover is provided, the life style of spouse, children and other dependents can be maintained even after the death of the one who brings in the family income. The education of the children can be continued without interruption until they themselves start earning. Even though the person cannot be replaced, at least the financial side can be taken care of. Life insurance is an important part of a sound financial planning.

Types of policies

Life insurance is basically classified into two types, temporary and permanent.

• The temporary insurance or term assurance covers only a mutually agreed period. For this term assurance there is an agreed face amount or the amount which will be paid to the beneficiaries in case the insured dies during this period. As the cost of assurance a periodical payment or premium has to be paid by the insured to the insurance company. The liability for payment ceases immediately on death of the insured. Full payment of face value is made by the insurance company to the beneficiary.
• Permanent life insurance is further divided into whole life coverage, universal life coverage, limited pay life insurance and endowment insurance.
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  1. For whole life insurance there is a level premium and a guaranteed death benefit and cash value. The main disadvantage of the whole life insurance is that the return on investment is much less when compared to other avenues of investments. Also the premiums are inflexible.
  2. In universal life insurance flexibility in premium payment is permitted. The return on investment is higher. A universal life insurance can be interest sensitive or equity indexed.
  3. In the limited pay variety the payment of premium has to be made only for a limited period, normally 10 to 20 years.
  4. The endowment policies are costlier because the premiums are higher. But the duration is shorter and the endowment date is earlier.

Size of cover

The size of insurance cover you may require depends largely on the needs of your dependents. If you are young and have small children the requirement is high because the cost of their education and bringing up must be taken care of in addition to the needs of your spouse. When you grow older you have to take care of your spouse only.

Next step

You can get insured though a consultant, a broker or online. After filling out the questionnaire, present yourself for the medical when asked for. Also pay the premium. When the insurance company accepts your proposal you are insured from that moment. Be aware that any false information given by you may result in cancellation of the policy.