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Insurance and You: What is Life Insurance Policy?

Homeowners Insurance life insurance policy

What is Life Insurance Policy? You may have an insurance policy yet be ignorant of how you are being manipulated by the firm you choose to insure with.

What is life insurance? and what are the Life insurance types I can choose from? Life assurance also known as life insurance is a contract one enters into as a policyholder (Customer) and the insurance company herein referred to as the insurer or assurer with the insurer promising to pay an amount as a benefit to the policyholder or beneficiaries captured in the life insurance agreement in exchange for monthly payments called premiums when the policyholder passes on. Premiums may be paid regularly or in the form of a lump sum.

Some life policies also include other events that may lead to the payment of benefits to the insured. These include terminal illness or critical illness. Life policies may also take care of funeral expenses if it is part of the agreement.

Life insurance types

Life insurance policies are of different types and include Term Life Insurance, Permanent life insurance, Whole life insurance, and Universal life insurance just a few to mention.

These life insurance types are distinct based on a lot of factors such as age, the health status of the customer at the time of buying the policy, the type of policy purchased and the amount of insurance the client opted for.

Term life insurance

The most basic and affordable insurance type is Term life insurance. This type of insurance policy is bought for a specified time. Should in case you die while on the Term life insurance policy, your insurer has an obligation to your beneficiaries the face value of the policy you purchased.

The policy considers your age at the time of enrolling on it, the premium you pay for given face value. In many instances, Term life insurance ends when the policyholder retires. If you buy this kind of policy at age 30, it will reach maturity when you retire.

I give you three important reasons why Term Insurance is best for you

1. It has the lowest cost coverage compared to other forms of life insurance and the maturity value offered.
2. It is a great policy for anyone who is forward-looking and has temporal insurance needs
3. Term insurance gives you the highest maturity value for your premium payments. For instance, it can give you a minimum of GHS250,000 in Ghana for your monthly premium while many more life insurance policy gives you less cover for all the premium you pay.

Permanent life insurance

Permanent life insurance is another important life insurance policy on the market today. With this policy, you pay your monthly premium until your death. Then when you pass on, the benefits shall be paid to your beneficiaries. This kind of policy very often comes with a cash value. Permanent life insurance policies are of three types: thus Whole, Universal, and Variable.

Whole Life Insurance

With Whole Life Insurance, the premium you pay is the same throughout the life of the policy, the insurer reinvests your premiums and gives you the chance to borrow funds from the cash value when you need it.

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Universal life insurance

Universal life insurance allows you to vary the frequency with which you alter the premium you pay after the policy has accumulated enough cash. But this may also reduce the value of the insurance at maturity.

Variable life insurance

Variable life insurance allows you to invest your cash value in stocks, bonds, and other long-term investments. This enables the value of the policy to grow very fast.

READ: If You Do Not Choose This Insurance Policy Now, You Will Hate Yourself Later

You can now make the best choice as to which of these policies is best for you. I recommend Term Insurance to anyone interested in buying a life insurance policy and if you are in Ghana and want to buy such a policy with the most trusted insurance company. Chat with us here on WhatsApp. Click the button below and start a conversation.