Any discussion of insurance would be moot, if we didn’t understand what insurance was.
Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.
When choosing a policy, it is important to understand how insurance works. Two of the most important components of all insurance policies are the premium and the deductible.
There are a number of different kinds of life insurance.
The most common type is term life insurance, where you’re covered for a fixed period.
Often, policyholders reduce their premiums by agreeing to decreasing term life insurance, where the potential payout shrinks year on year, usually in line with a repayment mortgage.
Alternatively, you may prefer whole of life insurance, which means the insurer would pay out whenever you died. Of course, that can mean that you’re paying premiums late into life, and it’s pricier than term insurance, too.
Life insurance isn’t just about dying. Some plans help to financially protect you if you suffer one of the critical illnesses covered. Your children may also be covered too.