When you hear the word “insurance”, does it
automatically come to your mind that it is something you will need in the next
years of your life? Not everyone has an idea about life insurance. One thing
you should avoid if you want to become secure in the future is being ignorant
about it. If an agent tries to offer you a discussion about this matter, you
should be open for some enlightenment so that the next time someone asks you
about life insurance, you have now the idea how to answer them.
If you are planning to get a life insurance for your
own and family’s sake, here’s everything you need to know about life insurance
because buying one without proper background information is like buying a blank
piece of paper waiting to get burned.
5 Major Things About Life Insurance You Need To Know
- If
you are a breadwinner, you need a life insurance.
When you are a breadwinner, everyone in your family
depends on you financially. This is the reason why you need a life insurance
for future’s security in case something bad happens. The same applies to life
partners, employees, and business for pooling of options. Even if you are
retired and financially stable already, life insurance can be your strategic
financial instrument.
- Life
insurance is not the monetary value of your life.
Some people, especially those who don’t have
understand what life insurance is, think that life insurance is an equivalent
price of their lives. It is not true but rather a compensation for the
unavoidable financial challenges that comes with the loss of life.
- Life
insurance is a contract.
Since life insurance is considered a contract, it is
therefore your agreement with your insurer. Everything in your contract should
take effect once you and the insurer signed the paper. The contract you have
with the firm is also called a “policy” with applicable “premiums” so you can
have “claims” when the right time comes.
- There
are 4 roles in life insurance policy.
You should understand the four roles–insurer, owner,
insured, and beneficiary. An insurer is the firm or the company issuing the
life insurance policy. This firm is responsible for giving out the claim in
case of unexpected death. The owner is the one paying the premiums. It could be
you or someone else. The insured is someone whose life the policy is based.
Lastly, the beneficiary is a person or entity who can receive the claims in
case of death of the insurer.
- Take
it as a risk management tool.
Life insurance is a risk management tool, not an
investment. It is something you can give to your family in case of uncertain
events, not something you can withdraw anytime. If you want an investment that
you can hold and get within a given time frame, you should get it separately
from your life insurance. Or if there are any available investment attached to
your life insurance, make sure to ask your agents about it.
