Top Reasons Why Life Insurance is Important for Your Grandparents

It is no longer novel to us hearing grandparents raising their grandchildren. For

grandchildren to be depending on their grandparents, it may be a big problem once they
lost one. Which is why the grandparents and the grandchildren must be co-equally
prepared when things run out of control. They say there is never a way to be prepared for
death because death keeps no calendar. Actually, there is one way and that is getting life
insurance for our loved ones, our grandparents in this case.

Importance in Getting Life Insurance

There are various reasons why we should apply for life insurance, but we will
highlight only ten in no particular order.
1. Security for dependents. Insurance is a long term investment but it is
undeniably a credit aid that could support dependents in terms of funeral
expenses and other financial goals, as life insurance serves as a safety
net for the beneficiaries. This way education of the grandchildren is
 secured, since the proceeds of insurance may cover up educational
expenses.

The older a person gets, the harder for him to be able to land a job in
order to support their grandchildren. In getting life insurance, the
grandparents are given an assurance that their grandchildren’s future is
secured. The insurance policy coverage has already noted where the
proceeds would go and it always goes to the beneficiary. It is upon the
choice of the insured however; on who they will choose as beneficiary.

2. Preservation of wealth. Life insurance can turn future investments in

real life property, stocks, and bonds. The subject of transfer of insurance
may be the direct family, and it would be the reason why life insurance
has the capacity to preserve the wealth of the family. Life insurance cuts
expenses.

Say for example, you set an amount of $1000 for basic needs, without
life insurance, the tendency of spending the whole amount is highly
probable. On the other hand, if you obtain a life insurance, you’ll be able
to preserve that amount because that amount had turn into an
investment.

3. Life Insurance Non-taxable. All types of life insurance are non-taxable,

meaning it is free of charge, and therefore beneficiaries may enjoy full
benefits the moment they received the proceeds of life insurance.

You are no longer charged of tax insurance fees because it would

tantamount to double taxation and which is a prohibited act.

4. Covers Mortgage and Personal Loans. Mortgage is a real or personal

property given as a security to satisfy the fulfillment of an obligation. But
you would be able to save your mortgaged property if you obtain life
insurance.

Say, you loaned $20,000 to a friend, and in order to secure the amount
loaned you intend to mortgage a jewelry in your possession. Having life
insurance, you no longer have to worry of losing a valuable jewelry
because it gives you the capacity to return the money you owed to
another person.
5. Peace of Mind. Everyone wants peace of mind certainly and that is
exactly what life insurance can give you. You may be asking; how can life
insurance give you peace of mind? Simple, it makes you go to bed at night not
worrying what tomorrow will bring. You won’t be afraid of death knowing something
could cover up your financial expenses. Saying that life insurance covers your
financial expenses also means you have the money which you may allot for
amusement such as travelling or other types of entertainment.
6. Cover for Health Expenses. Illness comes as a theft and threat in our
savings. Most often than not, we lost part of our savings without realizing it due to
unexpected illness that comes within the family. But who needs to prepare for
sickness when someone or something covers you up.
The proceeds of life insurance do not only cover financial but also health
expenses. There may come a time where our grandparents are at the period of
senility and we might need to send them for the care of an institution. Life insurance
gives you the capacity to pay services of such institution.
7. Incontestability of Life Insurance. Once a life insurance has become
incontestable, the insurer is bound to it for all purposes it deems proper and cannot
evade payment.
Life insurance therefore is not that much of a risk, rather, it is very secured
since it is protected by incontestability clause.
8. Protection Function of Life Insurance. While a policy is in force, how
can life insurance company agrees to pay whenever an insured dies? First is the
fact that all insurance is a matter of pooling, of group sharing of losses. For every
insured who dies in a year, there are other new insureds who are not expected to
die and will pay premiums for that year. Which makes it almost impossible to lose
funds for every insured’s beneficiary.
9. Savings Function of Life Insurance. Through the medium of life
insurance, hundreds of thousands of individuals have accumulated savings while
providing financial protection for their families. These savings are pooled by
insurance companies and injected back into the financial bloodstream of the
economy in the form of investments.
10. Apportionment. Apportionment of policy owner dividends is one of the
most important functions of life insurance companies writing participating
business.
Types of Life Insurance
There are lots of types of life insurance but we will bring them down into two most
important components as stated below:

 Whole Life Insurance - termed as how it should be understood, whole life

insurance is designed for lifetime coverage. Due to its lifetime coverage, it helps
on the preservation of the wealth until it is transferred to beneficiaries. This type of
life insurance is a fix model. Meaning, once you set up a premium amount to pay
every month, you can no longer change it. You cannot downgrade or upgrade this
type of insurance.
 Universal Life Insurance- is a permanent insurance, the only difference it makes
with other life insurance, is that it provides you an option whether to lower your
payment or raise your payment. Therefore, this type of life insurance is a variant.
It may change from time to time.

How to Get Life Insurance

Like all any other insurance, for it to be perfected three important elements must
concur: a) consent, b) object and c) consideration. The contract must be assented to by
the parties in person or by their agents. Under the law, assent or consent is manifested
by the meeting of the offer and the acceptance upon the thing which are to constitute the
contract.
If an application for insurance has not been either accepted or rejected, there is no
contract yet as it is merely an offer or proposal. Similarly, the contract is not perfected
where applicant for life insurance dies before its approval or it does not appear that the
acceptance of the application ever came to the knowledge of the applicant.

A) Condition Precedent of Life Insurance

The usual condition found in the application for insurance or in the policy are that
the contract shall not become binding until the policy is delivered and the first premium
paid. Until the conditions are fulfilled, the policy is of no binding effect.

B) Importance of Delivery of Policy

Delivery is the act of putting the insurance policy, the physical document, into the
possession of the insured. The delivery of the policy is important in at least two ways:
  As evidence of the making of contract and of its terms; and
 As communication of the insurer’s acceptance of the insured’s offer.
The delivery of the policy is not however, a prerequisite to a valid contract of
insurance. The contract may be completed prior to delivery of the policy or even without
the delivery depending on the intention of the parties.

C) Effect of Failure to Read Policy

The fact that it is customary for insured persons to accept policies without
reading it the failure of the insured to read the policy is luckily recognized by
the courts. However, the insured has the duty to read his policy and is bound
by his contract whether he reads it or not.

Life Insurance as Property

 Compared with Other Property. It is important to consider the life
insurance policy as property and to compare it with other property which the
deceased insured owned at the time of his death. One’s life insurance does
not transfer to heirs or beneficiaries. Rather, death transforms the life
insurance policy, which during lifetime was only a bundle of promises, into
cash. Whereas a decedent leaves his lands and buildings, stocks and
bonds to his heirs, life insurance on his life cannot be given to anyone after
his death. Instead he leaves them the cash into which the policy has been
transformed.

 Guaranteed Value at Death. When the life insurance on one’s life is

compared, as property, with the other forms of property which are owned,
one significant difference stands out. It is that the value of the life insurance
policy is always guaranteed to be its maximum at the moment the death of
the insured occurs.

Rights of Insured Under a Lapsed Life Policy

The rights of the insured under a lapsed policy are determined by the terms of the
policy supplemented by any statute applicable. The usual consequences of a lapsed
policy are: forfeiture of all rights; extensions of insurance for a certain period; or granting
paid up insurance for a certain amount.