The Basics of Life Insurance

For first-time life insurance purchasers, it may seem a little confusing. There are terms life insurance companies use that may not be familiar with some people, and there are concepts that seem far-flung for people who know nothing about financial planning and investment. Te truth is: the value of your life insurance does not matter when trying to understand the concept of life insurance. Whether you purchase cheap life insurance or one that involves millions of dollars of investment, the concept remains the same.
 
Life insurance policies provide monetary aid for your beneficiaries when you pass away. Your beneficiaries are chosen by you. And may receive the monetary aid in lump sum (that is, at one time) or monthly, whichever they choose.
 
You will also be required to pay a premium. This is the amount hat you pay the life insurance company. You can either choose to pay for it monthly, quarterly, or annually. If you get cheap life insurance, then you will be required to pay a smaller premium. In contrast, a more expensive life insurance policy will require you to pay more. But what dictates the value of your life insurance? It is your coverage.
 
Your coverage is the amount that the life insurance company will grant you based on the premium that you have decided to pay. It dictates whether you have cheap life insurance or an expensive one. It is also the amount claimable by your beneficiaries once you pass away.
 
There are many factors that affect the coverage that may be grated to you. Your age for example, is one of the major factors. Younger people tend to be granted a larger coverage even if they pay the same premium price that is paid by somebody older. This is because a young person is expected to die later. Health is also one factor that affects the coverage that may be granted to you. The healthier you are, the larger coverage will be granted to you as compared to a person who is considerably less healthy than you. Again, this is for the reason that you are expected to live longer. There are other things that affect the coverage you are granted like your lifestyle, hobbies, habits, and occupation.