Life Insurance – Ensure your family's future income!

Dating back to ancient Rome, Life insurance was used to help insure the "burial clubs" members' funeral expenses and helping the survivors financially. Modern life insurances were introduced in the late seventeenth century in the UK as insurance for traders and underwriters who met to discuss deals at Lloyd's Coffee House.

Like all insurances, the insured transfers a risk to the insurer, receiving a policy and paying a premium in exchange. People commonly use this type of insurance to cover after-death arrangements such as funeral costs and mortgages payment, replace lost income that the family misses, pay estate taxes, retirement, or even provide liquidity when assets are tied into real estate.

There are basically four parties involved in the insurance: the insurer, the insured, and the policyholder, where usually the policyholder and the insured are the same person; and last but not the least important is the beneficiary who receives the insurance proceeds upon the death of the insured.

You should know that this insurance can be divided into two basic classes; term insurance and permanent insurance. Term insurance is the simplest and least expensive insurance that provides coverage for a specified period of time, generally 5, 20 and 30 years. It's a pure insurance with no cash value account. This insurance protects the family by providing money they can invest to cover living expenses or after-death arrangements.

Permanent insurance remains in force until the policy matures. Often referred to as cash value insurances, their premiums are larger than term life premiums. The four basic types of permanent insurance are Whole Life Assurance that provides permanent protection for a level premium with a cash value table, Universal Life Assurance that provides permanent insurance coverage with greater payment flexibility, Limited Pay Off Insurance in which all the premiums are paid over a specified period and finally Endowment insurance where the insurance matures before the normal endowment age.

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