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How Does Life Insurance Work in the USA

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How Does Life Insurance Work in The USA

Life insurance in the USA is an important protection for family assets, and also many companies. They are policies that prevent economic losses if one of the parents or an important partner or director of a company is missing.

Anyone can purchase life insurance in the USA since it is important to preserve the family economy in case a family member is missing. In the family, benefits are obtained by insuring:

  • Father or mother who provides the income. This allows, in the absence of him or her, to continue with the same standard of living.
  • Father or mother who is in charge of household activities. In the absence of the said person, the spouse may cover the costs of hiring people to carry out the tasks performed by the deceased person, without having to affect their activities.
  • Children, since this, allows them to be directly insured as soon as they reach adulthood, regardless of whether they suffer from any health problem.

The money obtained is also used to cover death expenses, in addition to the fact that there are insurance policies specifically for this purpose, where the insurer is in charge of all the procedures and expenses.

In companies, life insurance is also important, since there are key people in every organization, who, if they are absent, could cause losses to the company or, in the least of cases, it would require time and money to prepare for a replacement. This type of life insurance is known as a key man or inter partners.

An additional option is credit insurance or debtor insurance, where a company that grants credit requires insurance where it is the beneficiary in the event of the death of the debtor. It also usually applies in cases of credit cards.

 

Terms in Which Life Insurance Operates

Life insurance policies can be contracted temporarily from periods of one year to generally 30 years or at the age of 65 or 70, depending on the insurer. They can also be contracted for life.

Children are generally insured from the age of 15 days and are covered by the said policy until the age of 25 when it is possible to change to whole life insurance. Acceptance ages vary depending on the life insurance plan in question and the insurer.

 

Who Are the Beneficiaries of Life Insurance?

Usually, the beneficiaries of life insurance are direct relatives such as spouses, children, parents, etc. The beneficiary is the one who will receive the amount of the insured sum according to what is specified by the insured in life.

In the case of life insurance contracted by companies, the beneficiaries can be the partners or the company itself.

In debtor insurance, the beneficiary is the company or bank that grants a loan.

 

Requirements to Take Out Life Insurance

Each insurance company sets its requirements and these also depend on the plan. Some of these requirements are usually:

  • The minimum age, in many cases from 18 or 21 years.
  • The maximum age, which in many cases is less than 70 or 75 years.
  • Not suffer from a known fatal disease.
  • Depending on the sum insured contract, the insurer may carry out medical examinations before accepting the risk.

 

Additional Benefits in Life Insurance

Life insurance policies often have additional cost endorsements that offer more protection. Some of the main ones are:

  • Accidental death benefit increases the payment of the sum insured, usually by the same amount.
  • Collective accidental death, which, if it occurs, usually pays an extra amount.
  • Total and permanent disability, which pays compensation.

Some life insurance policies generate dividends, which can be requested during the life of the insured at a certain time. They can be used for whatever you want.

 

See More: 4 Best Health Insurance for Children in the United States

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