For many people, life insurance is not a question of if, but when. It’s a confidence builder; it’s an idea that helps you prepare for the worst and have peace of mind knowing that your loved ones will be cared for even if you’re not around to help them. In this article, we’ll discuss the benefits of life insurance and show you how to find affordable rates. We’ll also offer some tips on getting covered without turning into an insurance salesman. Helpful resource-getting insights:
WHAT IS LIFE INSURANCE?
Life insurance is a contract between you and an insurer (an insurance company) where the insurer promises to pay someone a designated amount of money upon your death. If you have life insurance, your beneficiaries will be able to rely on those funds to pay for funeral services, medical bills, and any other costs that might pile up after you’re gone.
WHO NEEDS IT?
Whether or not you should have life insurance is largely dependent on your situation and the people around you. If there’s an estate or inheritance that needs protecting, for example, life insurance can play a big role in keeping your family afloat if anything were to happen to you. If you’ve got a family or dependents who rely on you for support, life insurance is probably worth considering. Typical customers-planning expert:
WHAT EXACTLY IS ‘THE BEST FORM OF LIFE INSURANCE?
There are multiple types of life insurance, each with its own set of advantages. The first and most popular is term life insurance, which comes in two parts-the terms and life.
The term describes the length of time that your policy will be active (generally between one and thirty years). At the end of that period, you can opt to renew it or let it expire.
Life describes how long your policy will last. Typically, it’s for a certain period-a certain amount of time and then it returns to the plan’s base amount (which is usually $1 million to $2 million) and reverts to the term policy.
Simply put, you pay the premiums upfront and then give them back at other intervals throughout your 20s and 30s. The second type of life insurance is short-term coverage (also called temporary or non-term).
This type can be beneficial if you’re trying to make sure that your beneficiaries have income once you’re gone but don’t want to pay high premiums. With a short-term plan, you pay a one-time premium that guarantees your beneficiaries up to a certain amount of money (tiers are determined based on the time).
Your beneficiary will get the money only when you die and then revert to the baseline amount, which is usually $1 million. There are also universal life insurance policies, but these are typically more expensive than term life insurance.
Universal life doesn’t have an expiration date, so it can be more expensive because of higher premiums. The money is there for you for the entirety of your life. Typically, your rates increase as you get older.
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PERSONAL INSURANCE NEEDS
When considering whether or not you should have life insurance, think about the people who rely on you most-your family, your parents, your spouse, and your children (if applicable). If one of them were to die, you’d want to make sure that they would have adequate funds to be able to pay for funeral expenses and other costs.
HOW MUCH DO I NEED?
Like with all insurance, what you need will depend on your financial situation. For example, if you have a large family there may be enough income coming in to cover the life insurance premiums while they’re in effect.
But if you’re single and not expecting any extra income (and therefore no need for extra coverage), your premium may outweigh what you would need in this situation (as well as paying for only one life instead of two).
The key is to speak with an insurance professional. And be sure to factor in the cost of covering more than one person (or just yourself).
WHAT ARE THE BENEFITS OF A LIFE INSURANCE POLICY?
If you’re looking for something that will provide a strong sense of security while you’re alive, life insurance is something that many people point to. Here are some of the strongest benefits: It provides peace of mind.
It protects your family. It’s easy to afford, especially with a term policy. It can help save on estate taxes. It offers tax advantages if you give the premiums to others related to you (such as your son or daughter).
Life insurance can be a beneficial decision for you and your family. It’s an investment in their future and your peace of mind. And the more coverage you have, the better off those around you will be.
This is something that only an insurance professional can tell you. He or she will take your circumstances into account when coming up with a number, typically between $300,000 and $750,000.
As mentioned earlier, this amount will be determined based on your situation, so don’t assume that you need a certain amount of coverage based on what you see others have-you’re most likely in a different position and will need to speak with an insurance professional to determine the right amount of coverage for you.
WHAT ARE THE ADVANTAGES OF A TERM LIFE INSURANCE POLICY?
Term life insurance provides benefits in the short term while also allowing you to take advantage of long-term savings. The term of your policy typically begins at the time you purchase it and ends when the policy expires or is renewed.
All the policies that are issued to you come with a set price, so you know how much the premium will be forever. If someone were to die, you would still have access to that money even after your premiums had been paid up.
You can renew the policy if it expires early or at other intervals throughout the term; some policies allow you to defer payments but not always. As you approach retirement, a term life insurance policy can help make sure that your beneficiaries have a secure income in their golden years by making their first payment right away.