Life insurance isn’t always the most pleasant of topics – after all, who wants to talk about what happens after they die? But for most people, they are concerned about making sure that their loved ones are cared for after they are gone. While there are some instances when life insurance doesn’t make sense – for some people the best thing to do is to take a proactive stance to make sure the provision is there if needed. The best way to properly protect your loved ones is to educate yourself as to the options and protections that different coverages offer. Understanding insurance terminology is a good start – and armed with a knowledge of the competitive products, you will be able to make the best possible choice for you and your situation. Here are the life insurance facts you need to know.
Did You Know? A local insurance broker is a great resource for teaching you about the nuances and complexities of life insurance. Don’t go it alone, be sure to use their knowledge base to your benefit.
There are hundreds of companies which offer life insurance policies, and each one of them offers a large number of possible plans and options to choose from. Just wading through all of the plans available to you may seem like a monumental task, which is why working with an insurance broker is a smart strategy. By working as a team, you can be ensured that you have the best coverage for your lifestyle and situation, and you get it at the best possible rates, saving you money and identifying discounts.
What Type of Insurance Do You Need?
Whole life insurance: Also known as “straight life” or “ordinary life,” a whole life insurance policy is guaranteed to remain in force for the insured’s entire lifetime or to the maturity date – provided the premiums are paid. The policy represents a contract between the insured and insurer. Provided the contract terms are met, the insurer will pay the death benefit of the policy to the policy’s beneficiaries when the insured dies. Premiums are generally higher than those of term life insurance, as term life premiums are fixed for a limited term.
Term life insurance provides coverage at a fixed rate of payments for a limited period of time. After that period expires, the client must either forgo coverage or obtain further coverage with different payments, terms and conditions. If the insured dies during the term of the policy, the death benefit will be paid to the beneficiary. Term insurance is considered the least expensive way to purchase a significant death benefit over a specific period of time.
Fast Fact: Term life insurance typically provides more coverage for less money when compared to whole life insurance.
- If you opt for whole life insurance, try not to consider the cash value of your Life insurance as a traditional investment.
- Any partial withdrawals or loans you make on the policy will reduce your death benefit.
- There are tax implications to using withdrawals, so be ready for a large tax bill if you do so.
Here’s a Hint: Consider the time you spend learning about insurance policies as an investment in and of itself. Remember, the more comprehensive the information you provide, the more accurate your online quote will be. However, there are real benefits to working with an insurance professional who can make suggestions and recommendations as to coverage, as well as who understands all the ins and outs of the many companies and plans.
Financial planners recommend re-evaluating your life insurance requirements every three years, or whenever you have a major life change such as a new baby, an inheritance, or paying off your mortgage. If your requirements do change, consult your insurance company about attaching a rider – which allows for you to expand coverage without giving up your accrued cash value.
Call Anderson & Associates Insurance Group today for more information on purchasing the right life insurance policy for you – and to learn more about all of the life insurance facts that are important to you.
