Know Your Life Insurance
It is nice to know something about the history of life insurance and how it works to know the type of insurance that is best suited to your needs. For example, ever wondered why the cost of insuring your life is so low? Sherlock Holmes would’ve said ‘Elementary’, but I’d like to use another word: LLN. The Law of Large Numbers or LLN allows insurers to spread risks over large numbers of insureds. This ensures that any one individual’s cost to cover a risk is considerably lowered.
However, the older we get the probability of our dying increases. So, life insurers are forced to charge you more money every year as you age. This cost of mortality, which goes up annually within every type of life insurance policy, is one of four cost components that determine the premium that you pay. The other components are overhead, commissions and profit. Elpasotimes.com reports:
An alternative to annual renewable term is decreasing term insurance. It has an annually decreasing death benefit for a level annual premium and is appropriate for paying off debts.
Read more: Find which life insurance works for you
If you enjoyed this article, please bookmark it at del.icio.us »
