Insuring your life is about loving your loved ones
People don’t always understand why they need life insurance. Especially those who come from the former Soviet Union. We have a lot of superstitions related to death, talking about it. We’re so superstitious that we’re afraid if we’re suddenly prepared, we’ll jinx ourselves and die right away.
But thinking about life insurance is no more superstitious than thinking about a fire extinguisher. You don’t think that if you have a fire extinguisher in your house, there’s bound to be a fire.
It just means that if there is a fire, you are prepared, you always have a chance to save yourself. It’s the same with life insurance. If you have it, it doesn’t mean you’re going to die. It just means that if something does happen to you, your family is covered and prepared for that tragedy.
In fact, in the U.S. you can insure everything.
The set of insurances depends on the line of business. Store chain owners need some insurance, construction companies need others, and offices need others. There is no standard coverage. It all depends on the specific company and facility: how many people work, how big the building is, how many cars the company has, etc.
The websites of insurance companies (e.g. Allstate, Progressive, State Farm) ask the client to look into the product himself and understand what he really needs in order to build his insurance package. However, this is not enough. The more information the insurance company has about the client, the more favorable the terms can become. That is why Americans turn to insurance brokers who compare offers from different companies and select the most favorable one for the client.
What else makes life insurance contracts different?
- The timing of the insurance fees
You can pay once when you sign the policy, or you can pay at fixed intervals – once a year, once a quarter, and so on.
- How long is the contract valid?
This can be for life or for a set period of time. For example, with a mortgage, a person most often insures life for a year, as concluding a contract for the entire term is not profitable: if the loan can be repaid earlier, some money for the insurance will be wasted and one will have to run to get it back.
- The form of insurance coverage
When an insured event occurs, you either get a fixed amount, or increased due to rising prices and investment, or decreased (for example, if the insurance is tied to a loan: the smaller the debt, the smaller the payout).
- The type of insurance payout.
You can get the sum insured all at once or in installments over an agreed period.
What insurance programs are available?
- Risk Insurance.
If you die, the money is given to the person named in the contract as the payee.
- Endowment insuranceCombines the functions of insurance and a savings account into which you periodically deposit money. If you die or something else specified in the contract happens, you or your relatives get the sum insured. If you live to the date specified in the policy, you’ll get your money back.
- Investment insurance
The insurer makes your money work and gets an income to share with you. The idea of passive income is tempting, but there are risks: premiums and investment income are not insured. If the company goes bankrupt, you will lose your money, and the investment may not bring the desired or declared by the insurer profit.
- Voluntary pension insurance
This item overlaps with funded insurance, but you have to live to retirement age.