What is life Insurance?

Life insurance may be a contract between you and an insurance firm . Basically, in exchange for your premiums, the insurance firm can pay a payment , referred to as benefit , to your recipients after you die.
Your beneficiaries can use the cash for any purpose.

This often includes paying daily bills, paying off your mortgage, or sending your child to school . Having a life assurance security system can make sure that your family can stay in your home and buy your planned activities.

In this agreement, the insurer is liable to pay the death benefit to the beneficiaries upon the death of the insured.

The applicant determines the purchase of a life insurance policy. The selection of the policy is inspired by the lifestyle of the dependents of the insured and the amount required to maintain their family’s needs.

sorts of life insurance

There are two main sorts of life insurance:

  1. Whole Life Issurance
  2. Universal life insurance
  3. Burial insurance
  4. Survival life insurance
1.Whole Life Issurance

Whole life insurance offers a fixed death benefit and cash value component that increases at a guaranteed rate of return. Many life insurance policies pay dividends that can be used to reduce premium payments or added to your cash value.

2.Universal life insurance

Universal life insurance often provides more flexibility than a whole life insurance policy. You can change your premium payment and death benefit within certain limits. With a universal life insurance policy, the cash value will be based on the type of policy.

For example, an indexed universal life insurance policy would include cash values ​​such as the S&P 500. A variable universal life policy usually consists of investment that you can choose and manage.Universal life insurance

3.Burial insurance

Burial insurance is a small whole life policy with a small death benefit, often between $ 5,000 and $ 25,000. Burial insurance is designed to cover only funeral costs and funeral expenses.

4.Survival life insurance

Survival life insurance or “dying second to life insurance” insures two people under one policy, usually a married couple. When both spouses die, the policy provides death benefits to the beneficiaries. Typically, living life insurance is part of a larger financial plan to fund a trust or pay federal property taxes

Types IN PAKISTAN

Life insurance is classified into three types IN PAKISTAN:
Whole life assurance

When the sum assured is paid on the occurrence of a certain event, that is, the death of the insured, and then it is called whole life assurance.

Term life assurance

At the maturity of a life insurance policy, the amount is paid to the policyholder in one shot.

Annuity:

When the sum assured is paid in installment at the maturity of the policy, usually monthly, it is called an annuity.

Best age to get life insurance
The ideal age to obtain life insurance is technically correct after birth. Life insurance is age-bound, meaning that as each year passes, the policy becomes more expensive.

The best age to buy life insurance is under 35, but some people in that age group are able to afford life insurance.

What is the cut off age to get term life insurance?

While you must be 18 years or older to take a life insurance policy, you can do this type of insurance on behalf of a child or minor. It is recommended to take a life insurance policy under 25 years of age but not more than 50 years. The sooner you take out life insurance, the greater the benefit.

However, if you are over 60 years of age, you cannot get term insurance as most providers have this age as a cut-off to provide benefits. This is largely due to the fact that the insurer has a greater risk of paying the risk before paying full benefits in case of death, as they are able to cover the cost of monthly payments or premium payments. .

What are the different ways to pay for premiums?
Premiums can be paid by policy holders to the insurer in a number of ways, such as: You are offering the policy to the insurer in such a manner as: in annual, half-yearly, quarterly or monthly installments.

Types of life insurance plans

  1. Endowment Plan
    Such an insurance policy is considered solid in terms of returns. It is one of the reliable methods of saving in which the sum assured is guaranteed at the specified time or upon its death.

The benefit of this scheme can also be increased by the completion of specific requirements. You can read about all the details here. This cover is known as supplemental cover.

  1. Child Education Plan
    This plan is going to help your child’s future. In order to make it grow and provide protection, this insurance policy is well suited for all parents. It also provides cash value. On the death of the insured, the sum assured or cash value whichever is higher is paid to the beneficiaries.

Some of these policy receivables can also be used for marriages. In addition, some companies also offer education continuity plans under this policy.

  1. Marriage Plan
    Every parent has a dream to marry their daughter in the same way he always dreams. This policy is going to help you make your daughter’s dreams come true. You can get benefits when you save money under this policy. At the end of the fixed period, the policy holder will get the sum.

Some companies provide add-ons under this policy.

4.Retirement Plan
Working full life is not an option and retirement is something that comes to everyone. So why not get a plan for this and plan your retirement smartly.

This scheme or plane will help you in some cases i.e. accidental death, sudden death, injury permanent disability. The scheme also provides an option to obtain the accumulated cash value and enroll yourself for the life pension scheme.