Millions of adults go to great lengths to protect their assets. Those measures run the gamut from simple everyday efforts like utilizing two-factor authentication when accessing financial accounts via online or mobile banking apps to more complicated undertakings like estate planning. Life insurance is a component of estate planning that is vital to anyone looking to protect their assets in the event of their death.
Explaining life insurance Life insurance is both similar to and different from other types of insurance. Like homeowners and auto insurance policies, life insurance provides financial protection in difficult circumstances. A life insurance policy is a contract between an insurance provider and a policy holder that guarantees a payout to beneficiaries designated by the insured individual in the wake of that individual’s death.
Personal history Insurance providers differ, but individuals interested in life insurance can expect to be asked about their medical histories and lifestyle habits when discussing policies. Prospective policy holders will often be asked to sign waivers that allow providers to access their medical records. This is necessary so companies can get an idea of the health of the person applying for life insurance, which will determine the cost of a policy. That information, as well as family history, is important because it can serve as an indicator of future health risks. Some variables, including lifestyle habits like smoking, won’t necessarily appear on an individual’s medical history. In an effort to address that, insurance providers typically ask prospective policy holders to answer a variety of questions about their lifestyle, including whether or not they smoke and how much alcohol they consume. It’s vital that individuals answer these questions honestly, as companies can deny payouts to beneficiaries if they determine policy holders misled them during the application process.
