by Pedro Pacheco

Created on: March 22, 2008

Life Insurance is an insurance that pays you when you die. This type of insurance is useful to people that work in high risk places like construction or mines. Imagine of a person dies because of an accident at work. The widow and the kids probably would not have enough money to eat or to pay the rent and would have to live in the streets. Some insurance policies pay more than 100.000$.

Death in not the only way of profiting from such insurance. Some insurance companies pay a smaller amount of money when you are ill or with a terminal disease but it all depends on policies you accept.

The price of this insurance depends on many factors and some companies demand you to make complete medical tests to calculate your life time left. It looks cold and inhuman the way insurance companies treat this sensitive subject but its their business. If you want to see some calculations search for "life insurance" on Wikipedia.

Is Life Insurance the right insurance for you? It all depends on your health and lifestyle. If you live in a safe place, if you eat a balanced diet, if your job is safe and sound, then probably you will just spend unnecessary money.
On the other hand if you already are sick and you work in a threatening job plus in a dangerous zone, then get life insurance before its too late!

Life Insurance vs Savings

Some people argue that having a saving account is better and less expensive than life insurance. This depends on how much money you earn per month. The ideal savings percentage is around twenty percent for most people. This means if your salary plus your mates salary is about 3000$ you should save 600$ per month. If you manage to save this percentage forget about life insurance.

Using Life Insurance As An Investment

Some companies allow you to invest the money you would get if something happened to you. With such policy, both you and the company could profit from the interest you would receive if you invest in stock for example. Another way could be hiring a professional broker with experience to manage your money. Just check very carefully this point with the company because this is a sensitive subject.

Tax and Life Insurance dont match. You cannot deduct this expense. But on the other hand, the income you get from the insurance does not have to be taxed too. If this is a good or a bad point I leave the judgment to you.

Life Insurance And Fraud

Dont even think about killing people to get their insurance money. Companies are very aware of such situations and if they dream the death and planned and executed, the persons family will not get a cent.

This last point slows down the process because the companies have to ensure they are not being scammed from people who knew the man had a generous policy.

Now the point. Some companies refute insurance to some people if they practice dangerous sports, such as extreme sports or challenging sports such as climbing the everest. This kind of situations are relatively rare but sometimes happen, so be prepared.

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