Have you ever considered how your financial state will play out? Some people believe that saving up can be done later since there are many ways to make money. But what they didn’t know is that nothing beats being covered and protected against any financial crisis that may come your way.
This is where insurance comes in, and life insurance is one of the most important types of insurance that you should have. It has various benefits, including peace of mind and financial security. However, before contacting a financial advisor, understand first what life insurance is and if it’s worth it.
What Is Life Insurance?
Life insurance is a contract between an individual and an insurance firm that commits the firm to pay a certain amount to the beneficiary in the event of the person’s passing. The policyholder pays premiums to the insurance company regularly to keep the policy active.
However, payouts are often not guaranteed, as the company will only pay out if the policy covers the cause of the individual’s death. For instance, because suicide is regarded as a self-inflicted death, most life insurance policies do not cover such ends.
Types of Life Insurance
According to financial advisors, there are two types of life insurance: term life and whole life insurance.
- Term Life Insurance: This insurance policy pays a death benefit for a specific time, usually between 10 and 30 years. If the individual passes away during this period, their beneficiaries will receive the death benefit. If the individual lives beyond the policy’s term, they will not receive any payment.
- Whole Life Insurance: This policy, also called “permanent insurance,” will cover a person for the rest of their life. The benefits include that the policy will not expire and can be used as collateral for a loan. However, the premiums for whole life insurance are much more expensive than term life insurance.
Does Life Insurance Pay Off?
The answer primarily revolves around several variables, the most important being whether or not you are financially dependent on other people. This includes your spouse, children, parents, and other relatives.
In addition, if you have a mortgage that you are paying off, life insurance can help your loved ones pay off the mortgage in the event of your death. For instance, if you have a £100,000 mortgage and a £100,000 life insurance policy, your beneficiaries can get £200,000 to pay off the mortgage.
Another factor that can influence your decision to avail of life insurance is if there’s an existing life insurance policy. In this state, it is best to review with a financial advisor to see if it makes sense to keep the policy or to cancel it and invest the money in another way. This way, you can have an informed decision that is best for your financial situation.
Final Thoughts
Life insurance is a sort of insurance that can offer financial security upon your passing. It can be worthwhile if you have dependents or wish to leave a financial legacy. There are different life insurance policies; the best one for you depends on your needs and budget. Make sure to browse and compare them before selecting a policy.
Everest Mortgage Services has a team of exceptional and top-notch financial advisors in Brighton who can help you with your life insurance needs. Get in touch with us today for more information!
