Life Insurance: Rescue Your Loved Ones From Never Ending Bills
There comes a time in everyone’s life where they look around and realize they want to make sure the people they love are always well taken care of. This may have you considering life insurance. If you are retiring, your company will no longer pay for your life insurance policy. Your choice is to go into retirement without a life insurance policy or to obtain an individual policy. If you choose to consider obtaining an individual life insurance policy, you may find that it is quite different obtaining one yourself versus when you had a Human Resources department. Just like any other type of insurance you purchase; it is very important that you fully understand what you are buying before you agree to it.
What are my options?
There are many different life insurance options, but the two most common types are term life and whole life. Although both life insurance, each one is distinctly different from the other. There are many different types of term life and whole life policies and many things you can add to each; however, determining what type of coverage will be best for you is the first step.
This type of life insurance is also called “temporary” life insurance. Remember that, because it does a great job of explaining the type of coverage you will receive with this policy. A term life policy is “temporary” because it covers you for a specific amount of time. Thankfully, the policy’s time frame is up to you! Most term life policies can be taken out for 10, 15, 20, or 30 years. If the policy outlives the chosen time frame, then it will expire. When this happens, you have three options. You can either renew the policy for an additional term, convert the policy to a whole life policy, or choose to continue without coverage. Keep in mind that if your term policy expires and you would like to renew it, your premium will be higher because your age has changed since you first obtained the policy.
Many individuals consider term life because of the lower premiums. A level term insurance policy will guarantee that your premiums and benefits will stay the same throughout the length of the policy, no matter market conditions. If you are just wanting to have simple life insurance coverage, then term life may be an option you want to look at first.
The most common type of permanent life insurance is whole life. Permanent life insurance is different from term life insurance because it lasts your whole life and does not expire as long as you pay your premiums. If you decide to purchase a whole life policy, it is important to note that the premiums are considerably higher than that of a term life policy. Once you purchase this policy, your premium amounts are locked in. No matter what happens to the market, you will pay the same premium. One reason to consider paying a bit more in premiums is, unlike a term life policy, a whole life policy builds cash value. Many individuals like this option because they want to see their premium dollars at work. Another main reason to obtain a whole life policy is that you can use it to access cash through loans or withdrawals.
Underwriting is a process done by the insurance company to determine how much your premiums will be. It does not matter which type if life insurance policy you choose, you are required to go through underwriting. Depending on which carrier you go with, they will have different underwriting guidelines. The underwriting guidelines usually consist of a person’s age, health, and life expectancy.
What all does life insurance cover?
Individuals purchase life insurance for several reasons. The first main reason is to make sure that your income is replaced for your dependents. Statistics show that seven out of 10 families rely on two incomes. Another main reason to purchase a policy is to cover funeral costs. When you think about life insurance, you often think about money going to a family if their loved one passes away. While this is true, many forget about the costs related to funeral expenses. The average funeral cost is $10,000, some less and some more. Additional reasons to purchase life insurance are for investment or savings purposes, providing an inheritance for your heirs, compensating estate taxes, and assisting in paying any previous debts.
“I’m still on my group plan, do I need additional life insurance?”
Purchasing additional life insurance is completely up to you and depends solely on the situation. If you are single, married and the other person is not dependent on your income, or have no children, then you may not see anywhere that you need to purchase additional life insurance. It also all depends on your employer’s life insurance policy. Many of the life insurance policies you obtain through your employer may not have as high of a face value as you may need. The recommended face value is ten times your income. It is important to examine the benefits you currently have, discuss options with your loved ones, and see if obtaining an additional insurance policy is right for you.
As you can tell, you have many different things to consider before purchasing a life insurance policy. The bottom line is that if you are looking into obtaining life insurance, it is not for yourself. Even though life insurance is a very common thing to purchase, it is a selfless act that will one day be admired. If you are ready to secure your family’s future with someone that cares, our licensed insurance advisors are here to discuss all your options with you and make sure you have all your life insurance needs before your adventure to retirement begins!