When you pass away, your family is left with a financial burden they have to carry. However, if you have life insurance, your family will be given financial protection that can help them out in the event of your passing.
Having life insurance is vital. Unfortunately, in 2018, only about 60% of individuals in the US had some life insurance. It is essential to keep in mind that your family will be left with the responsibility to cover your end-of-life expenses without a life insurance policy. This includes dividing your assets and paying your outstanding debts, placing them in a challenging situation.
Understanding Life Insurance
Life insurance is something people know they need but don’t have an exact idea of how it works. Life insurance is when an individual or group and an insurance company agree on specific terms under a contract. The terms usually stipulate the guidelines and other instructions regarding what the beneficiaries will be receiving (monetary benefit) once the individual dies.
Most people look at life insurance as financial protection for the deceased’s family. The monetary benefit is usually used to cover the costs of the funeral. This also includes the burial and any other outstanding debts or bills of the deceased. Life insurance policies have changed to provide clients with more financial power and flexibility.
If you are interested, you can look for life insurance agents. It is easy to find them since they tend to use pay-per-click or ppc for insurance advertising. Look for someone who can help you meet your needs concerning life insurance.
Types of Life Insurance
The following are types of life insurance you should consider:
Whole Life Insurance
A whole life insurance policy remains active up until the policyholder’s death. They don’t expire as long as the policyholder is still alive and pays the annual premium.
Most of the time, whole life insurance rates and death benefits are fixed. Moreover, some even offer a cash value option that can permit you to borrow money or withdraw against the policy in case of an emergency.
Whole life insurance premiums tend to be higher than other types of life insurance. If you choose to buy a whole life insurance policy for an annual premium of $5,000, you will have to pay the said amount for the rest of your life.
Term Life Insurance
Term life insurance is usually designed for a set period and then expires. The term usually runs for 1 to 30 years. Not only that but the death benefit is fixed under this type of life insurance.
It is essential to know that the premiums for term life insurance are not always fixed. It is best to ask your insurance provider regarding this matter before you decide to sign a policy.
If you buy a 15-year term life insurance policy and pay an annual premium of $1,000, then you will pay that amount for the rest of the 15-year term. Furthermore, death benefits will only be paid if you pass away before the end of the 15-year term.
Convertible Life Insurance
Choosing a convertible life insurance policy means that you currently have a term life insurance policy that you will eventually convert to a whole life insurance policy when the term ends. Not all insurance companies offer this to policyholders. Hence, it will help if you ask about it.
If you choose to buy a 15-year convertible life insurance policy, you will have to pay the annual premium for the said term. Upon the expiration, you will also have an option available to convert the insurance policy into a whole life insurance policy.
Life Insurance Terms
The following are some life insurance terms that will help you understand concerning life insurance:
A beneficiary is someone who receives the monetary value of the deceased’s policy. It may be one or more individuals. It is vital to know that you can put anyone as your beneficiary. However, most people choose those close to them, like their children or spouse.
The insurance company refers to this term as payment. A premium is usually given every month. However, you can also choose to pay it annually or quarterly. Furthermore, premiums tend to depend on a lot of factors.
A rider is considered an additional coverage you can top up to your original policy. This may mean adding your spouse to the policy and others.
The financial protection the beneficiaries will be receiving once the insured passes away.
They are a life insurance company.
Insured is considered the individual where the life insurance policy is for.
The policyholder is considered the person who is obtaining the life insurance policy. The policy may either be for them only or for someone else.
To Sum It Up
Many financial burdens will be handed down to your family if you pass away, leaving them with no choice. With life insurance, your family will have financial protection that can help them out, especially when it comes to your end-of-life expenses. Furthermore, it is vital to keep in mind that you should consider different types of life insurance before you decide to get one finally.