Life insurance is a complex topic requiring a lot of research and guidance to grasp fully. Below, you will find a few of the most frequently asked life insurance questions, answered simply for your understanding.
What Is Life Insurance?
Life insurance is a contract with an insurance company to pay out a sum of money upon the death of the insured. The money paid out is what’s called a “death benefit.” There are a lot of life insurance plans out there that accommodate different needs. For example, you can get a life insurance policy that will pay out money, not just if the insured dies, but if they are diagnosed with a serious illness. Other life insurance policies can be tied to investment accounts so that they accrue cash value like a savings account. Other policies can furnish extra money for retirement, college, or even unforeseen emergencies. Furthermore, a life insurance policy can pay for a person’s final expenses– things like a cremation or casket.
Who Needs Life Insurance?
Anyone who would be leaving a family or large amounts of debt behind if they suddenly passed away needs life insurance. Having a life insurance policy in place ensures that the loved ones of the deceased will continue to live comfortably after they’re gone, mitigating big-ticket expenses like mortgages, bills, student loans, etc. People who are worried about not having enough money in retirement, worried about being diagnosed with a chronic or terminal illness, worried about funding the dreams of children, or worried about how much their funeral will cost their surviving family members are perfect candidates for life insurance.
When Is the Best Time to Get Life Insurance?
Initially, the best time to purchase a policy is in your 20s. Generally, the younger you can purchase a life insurance policy, the cheaper it will be. And here’s why: the person purchasing the life insurance policy will need to go through a vetting process called underwriting. Underwriting determines how risky it will be to insure someone. A life insurance company pays money to beneficiaries when the owner of the policy dies, so underwriters are basically assessing, “How likely is it that this person will die soon?” If the likelihood of death is low (which is the case for most young, healthy adults), the life insurance plan will be relatively inexpensive. Conversely, if the likelihood of death is high (like for someone 65+), then the life insurance plan will be more expensive.
If your policy is connected to an investment index, your policy will actually grow in value over time. That is another good reason to get life insurance while you are young. You can use the money your policy collects to pay for retirement, vacations, weddings, or whatever the person wants.
How Do I Get Life Insurance?
Purchasing life insurance is easy when you have the right resources. The first step is to find a licensed life insurance agent. This agent will listen to your story, assess your needs, and help you find the insurance carrier and products that fulfill your needs. This agent will also assist with your application, the underwriting process, and any future claims you make. Furthermore, the licensed agent will conduct regular policy reviews and make changes to your policy as needed.
Life Insurance Questions?
We hope this review of some of the most-asked life insurance questions has been helpful.
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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Article updated on 11/27/24.