What Is Life Insurance?

What is life insurance? Life insurance is used to provide money for the expenses of your loved ones who will no longer have your income to provide for them when you have passed on and to pay for your final funeral expenses.

We all will need to purchase some sort of insurance in our lifetimes, whether it be auto insurance, homeowner's insurance, disability insurance, or one of the many other types of insurance available. Each kind of insurance insures you against a specific type of risk. In the case of life insurance, the risk that you are insured against is the loss of your own life. A life insurance will pay a set sum of money to a named beneficiary in the event of your death. Life insurance is used to provide money for the expenses of your loved ones who will no longer have your income to provide for them when you have passed on and to pay for your final funeral expenses. Since all of us will eventually die, life insurance is guaranteed to pay off at some point in the future if you are covered at the time. Joe Sostarich, a 26-year veteran of life insurance sales and management says, "Life insurance is protection and an automatic estate for your family should you die prematurely."


Life insurance policies can also be used as a savings or investment tool. Joe says, "Life insurance can be a way for the insured to add to their pension." Some types of life insurance build cash value over time that can be drawn against as a loan. Policies can also be set up to pay the insured annuity payments after a certain amount of time. Some people set up life insurance policies in order to insure a set amount of money being paid to them in their retirement. Life insurance annuity payments can be a great supplement to social security. While the insured is building cash value he is also protected in the event of an untimely death.




If you want to get life insurance there are many agencies that can sell it to you. Most types of life insurance will require the insured to go through a physical exam in which a thorough health history will be taken. Certain types of blood tests may also be required. The life insurance company will want to make sure you are in good health so that they are not taking undue risks by selling you a policy. For instance, if a person had a terminal illness it would be almost impossible for them to purchase a life insurance policy because the risk to the life insurance company would be too great. Joe says, "Some life insurance policies institute a two year probation period. During this period, if you were to die from an illness that you had when you bought the policy but was not disclosed to your insurance company they would be able to deny your insurance claim. Once the two year period had passed the claim would be paid no matter what."

Life insurance is not a necessity for everyone. If you have a spouse, children, and a home then life insurance is a good investment for you. You want to be sure that your family is financially secure if you die. Single people who live in an apartment really would not have the need for life insurance unless they had someone they needed to take care of financially in the event of their passing like an older parent.

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