Wednesday, August 1, 2007

Term Life Insurance for Family

What is a family? Most family will consists of a husband, a wife and children. In most cases, it will be the husband who bring the paycheck home. There are also wives who work. For a young family, there will be children (read dependents). They will be staying in a house, most likely bought with a loan. And members of a family are mortals, that is, they don't live forever. You probably have heard the saying "life hangs on a thread". And I think it is a pretty thin thread because mortals are subject to all kind of contingencies. A mortal can fall sick and die, or get involved in an accident, etc. What happen to the dependents when the breadwinner dies? If he/she did not provide for that possibility, the dependents suffer. At best, they will be forced to leave school and look for a job to survive, and that is, if they are old enough to work. They could also lose that roof over their heads if they can't keep up with the loan repayments and the house is repossessed.

Here is where life insurance comes in. There are many types of life insurance. Term life insurance, whole life insurance, and in my country, what they call endowment insurance. Of all the life insurances, term life insurance is the simplest and cheapest type of policy. It is just like car insurance or fire insurance. You pay to be insured for a certain period of time, and if within that period of time, something happened for which the policy covers, the insurance will pay you or the third party who suffered damages or injuries. If nothing happened, at the end of the period you get nothing back. Further, even after paying the premium for a long time, there is no cash value attached to the policy. That is why some insurance company may find term life insurance difficult to sell.

That is where other types of insurance comes in. For whole life insurance, you pay premium for the whole of your life and the longer you pay, the higher the cash value attached to your policy which you can surrender to get the money. Then there is what they call endowment insurance in my country which combine an element of savings so that at the end of the insured period, you get a sum of money back. This can persuade those who cannot accept paying for a piece of paper and not getting "anything" back in return. It may also be good as a form of saving up for a child's education. However, in my opinion, if you live in an era of high inflation, whatever you hope to get at the end of the insured period is largely eaten up by inflation.

It is important for you to have some kind of insurance, and if budget is a constrain, you can try to get affordable insurance quotes for families

There are other forms of insurance you can get. Check out their site for details.