There are many things to consider when it comes to getting a life insurance policy that can help protect your family’s future financial needs. Knowing how life insurance works, types of coverage available, why you need it, and how to go about choosing a plan that’s right for you are very important factors.
Why Do I Need Life Insurance?
Burial and Final Expenses: even a simple funeral can cost thousands of dollars. The National Funeral Directors Association reports that the median price Americans pay for a funeral is about $8,000, as of 2021. That doesn’t even include the price of a vault, something that most cemeteries require, which can be as much as $7,000. Most Americans get life insurance for this reason.
To Replace Income: if you died leaving behind a spouse and young children, it may be hard for them to make ends meet without your income. Money from a life insurance policy can help maintain your family’s standard of living and pay for expenses that go along with raising children. Almost 70% of Americans get life insurance for this reason
Living Benefits: Many policies have available riders that will allow you to have access to a large percentage of the death benefit while you’re still alive if you become terminally, critically or chronically ill. Conditions vary from carrier to carrier
How Do I Decide What Type And How Much?
Determine your needs: calculate how much debt you have, your monthly living expenses, and your final expenses. Include any future expenses, such as college tuition. Figure out how long you need replacement income and how much income it would take for your survivors to pay for immediate and future expenses.
Speak with a licensed insurance broker: speak with a licensed insurance broker to go over more details about your needs and options.
Make sure you can afford the premium: double check how much income you have coming in and how much expenses you have going out to make sure the rate you’re getting is affordable.
Read your policy: after you’ve been issued a policy, make sure you read all the fine print. If you don’t like your policy, state laws generally mandate that you have a certain number of days to cancel your policy and receive a refund of any premiums you paid. Depending on the state, this may be within 10 to 30 days after the policy issue date.
Types Of Life Insurance
Life insurance can either be temporary or permanent. Temporary insurance is more commonly called term insurance, and . Permanent insurance covers you for your entire life as long as premiums are paid.
TEMPORARY OR TERM INSURANCE
Term policies are issued for a specific number of years, often from 5 to 30. Practically all term insurance policies sold to individual consumers are level premium term policies. This type of policy guarantees that your premium will stay the same for a set period of time, which could be the entire term or just a portion. At the end of the term the coverage will cease although most companies will offer to continue coverage at adjusted rates based on the owners age at the end of the term.
Two of the most popular types of permanent insurance are whole life and universal life. Most whole life policies provide a level premium, so the rate that you pay stays the same for the entire policy. With most life insurance policies, you can get a larger death benefit by passing a medical exam. Other permanent insurance policies available include universal life and variable universal life. Permanent policies will accumulate a cash value after a certain number of years
Hopefully, this has provided some basic information regarding life insurance. It is always best to speak to a licensed professional to help you decide what is the best type of protection for you and your family. Click the link below to get in touch with a licensed broker who will give you a FREE no obligation evaluation