The beginning of September marks the first day of Life Insurance Awareness Month. You may be familiar with life insurance, or perhaps you do not know anything about the topic. Let us examine why a person should consider purchasing a life insurance policy and understand the different kinds of life insurance available.
Why should I get Life Insurance?
Life insurance benefits you in several ways. If an untimely death occurs, the right life insurance plan can help provide for surviving family members’ needs. Life insurance can also pay debts and a mortgage after the policyholder suffers a premature death. The right policy can offer financial support while you are still living. Certain policies will allow you to make cash withdrawals to assist your needs. Also, if you buy a life insurance policy, you can supply an inheritance to your spouse and children. These options can provide peace of mind that if you were to pass away, there are still provisions for your surviving family.
What options are available?
Whole Life Insurance provides coverage for the buyer’s entire life. Three main components make up the whole life policy. The level premium remains the same for life. If the guaranteed premiums are paid, the death benefit is guaranteed. The policy includes guaranteed cash values that grow at a guaranteed rate. The cash value gives you several options. You can turn in the policy to receive funds to live off in retirement. Also, you could borrow against the cash value account or withdraw money to pay your premium costs. Borrowing against your policy does require tax payments.
Term Life Insurance lasts for a predetermined amount of time. Usually, the timetables are between 10 and 30 years. Unlike whole life policies, term life insurance does not have a cash value available. The insurance intends to give beneficiaries a payout if the purchaser dies during the preset term.
Universal Life Insurance is another permanent policy that provides coverage throughout a person’s life. When the policyholder passes away, their beneficiaries receive monetary funds. Unlike whole life insurance, universal policies carry flexible premiums. If your insurance company permits, you can also increase or decrease the death benefit pending passing a medical exam.
Group life insurance involves an employer, association, or labor organization supplying a life insurance plan for employees or members. These policies typically contain basic coverage and can be part of a benefits package. In the event an employee or member dies, there is not a large benefit. Many employers require a probationary period before new employees can participate in the coverage. No medical exam or underwriting is needed for the individual to receive coverage. The employee or member’s payment into the policy is either non-existent or minimal and usually withdrawn from their weekly or monthly paycheck.
Final expense insurance prepares for end-of-life expenses such as funeral and burial costs. It is a type of whole life insurance policy generally affordable and aimed toward older individuals who do not already have a life insurance policy. The benefits are not as significant as other policies but can relieve loved ones of out-of-pocket payments when dealing with an untimely death. After you acquire a final expense policy, premiums cannot increase, and the benefit will not decrease.
Guaranteed life insurance offers limited coverage and does not require a medical exam or health questionnaire. This plan is designed for elderly individuals with health conditions that would cause them to be ineligible for other forms of life insurance. Guaranteed life insurance premiums tend to be high because the insurance company must presume there is a greater risk to insuring the person. When people aging into their 40s have yet to purchase life insurance, purchasing simplified issue life insurance is an option. This insurance does not require a medical exam, but you must answer a medical questionnaire. Coverage quantities are limited but higher than guaranteed policies. Generally, simplified issue life insurance has lower premiums than guaranteed life insurance.
If you have purchased life insurance, review your plan with your family to ensure they know about the policy. Life Insurance Awareness month is a great time to consider purchasing a suitable policy that benefits your needs. If you found this article helpful, please read about Health Insurance Day.
Life Insurance Questions?
We hope that this information on Life Insurance Awareness Month is useful to you.
If you’d like to learn how we can help you plan your retirement, call Empower Brokerage at (888) 539-1633 to speak to one of our Life and Annuity experts or leave a comment down below.
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