People who are planning to purchase a life assurance plan or a life insurance policy often hesitate doing so because of the confusion that is associated with understanding all the terms and concepts related to such policies. In order to help people understand life insurance policies better, here are some of the considerations that people must make before purchasing a policy for themselves.

The Importance of a Policy

The first thing that a person will consider in purchasing a policy is its importance. Why is life insurance important? In order to answer this question, a person must first ask this question to himself, “If I die unexpectedly, will somebody be affected financially?” If the answer is “Yes”, then that means that this person needs a policy.

There are two parties who sign a life insurance contract – the policyholder and the insurance company. The insurance provider will agree to pay a designated amount to the holder upon his or her death. The policyholder for his part will agree to pay premiums without default and this goes towards the insurance policy cost. Both parties must uphold their end of the contract. The insurance provider has the right not to pay the death benefit if the holder does not make regular payments on the specified dates.

A life insurance policy provides peace of mind to a person who has families dependent on them. the holder of a policy can assign the death benefit to anyone of their choosing – parents, children, spouse, pets or even a favorite charity. The beneficiaries must be clearly listed in the policy and they will receive the death benefit upon the demise of the policyholder.

How much does it cost to buy a Policy?: The next important consideration is the insurance premium cost, which is the amount that a person has to pay at regular intervals to keep the policy alive. Insurance rates are determined by the amount of premium that is being paid. This in turn depends on the type of policy, the insurance term and the coverage amount chosen by the holder.

An important consideration when a person decides to invest in life insurance is the coverage amount of the policy. This is the money that the holder is insured for and it is what his beneficiaries will receive upon his demise. The cost of insurance is directly proportionate to the amount of coverage – higher coverage amount means higher insurance premiums. The holder must choose the coverage amount based on his family’s needs. A middle income family will require a smaller coverage amount to take care of their future financial needs. The common method of calculating coverage amount is to multiply current annual salary by 10 and this figure will be adequate to take care of the family’s needs in the future.

The kind of policy chosen by the applicant also determines premium amounts. If he chooses a term life insurance policy, his life will be insured for specific time periods ranging from 1-30 years. When the holder requests term life insurance quotes, he will find that the insurance rate will vary with the term since total cost will be divided over the entire term. Hence, a long term policy will require the holder to make lower premium payments on the required dates.

The choice of type of policy ultimately determines the premium amounts the holder is obliged to pay. For example, universal insurance is a type of permanent insurance that has two components – death benefit and savings component. The holder has to pay higher premiums that are divided between these two components. Term insurance on the other hand has only the cash value component and is cheaper since the savings option does not exist.

Another type of plan is the no medical life insurance that allows an applicant to buy coverage without having to submit to a medical exam. The insurance rates of this policy will be determined by the age of the applicant and the answers to the questionnaire he submits to the underwriters.

If you want to find out more information about instant term life insurance, you should visit David Livingston\’s site today where he shares a lot more information on how to get the best policy to suit your needs. Go here now to get more details http://www.equote.com/espanol/.

Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information, visit his site at http://www.equote.com/seguro-de-vida-universal/.

Author Bio: If you want to find out more information about instant term life insurance, you should visit David Livingston\’s site today where he shares a lot more information on how to get the best policy to suit your needs. Go here now to get more details http://www.equote.com/espanol/.

Category: Finances
Keywords: life assurance, term life insurance quotes, term life insurance, no medical life insurance