Life insurance is a terrific investment to help secure your family’s financial future. Should you be the head of the household and should your family be dependent upon your income, your death can have a significant impact on the ability of your loved ones to continue to live according to the standards they have come to expect and enjoy. Insurance will safeguard your family and their financial future, and the sooner you obtain a policy the more affordable it will be.
Life insurance policies are contracts with insurance providers. The company provides this protection in exchange for your regular premium payments. Generally, upon your death, the insurance company will provide a lump sum payment to whomever you designate as your beneficiary. When you apply, the insurance company will look into your health and medical records and then either approve or deny the policy. Helpfully, many insurance companies offer ‘riders’ or add-ons to the policy that enhance the kind of insurance obtained.
There are three main types of policies:
Term life is designed to deliver financial protection for a certain time period, normally 10 to 20 years. Usually, the premiums are guaranteed and remain consistent for that specified duration of time. After the period of time ends, companies may propose continual coverage, typically at a higher premium amount. Term life is commonly a less costly option for young, growing families. Term payouts are commonly used in exchange of lost income for the duration of employable years. It may offer an overall fail-safe for your beneficiaries, and may also ensure the family unit’s economic goals are still provided for and met—goals such as mortgage repayment, maintaining a functioning business and paying for educational costs.
Whole life is a permanent life insurance policy, designed to give lifetime coverage. As a result of the lifetime coverage period, whole life generally has higher premiums over term life policies. Premiums of this policy are normally fixed and, different from term, whole life pays out a cash value and may accrue tax-deferred value over time.
Universal life provides another form of permanent life, offering lifetime coverage. Different than whole life, universal life policies can be more flexible and give you the choice to lower or raise your monthly premium or even change coverage during the course of your lifetime. It is similar to whole life in that it provides a tax deferred savings factor, assisting in building value over time. Furthermore, because of the lifetime coverage it provides, universal life normally also has higher premiums over term policies. Universal life can provide flexibility with estate planning, assisting to conserve wealth that is to be shifted to beneficiaries. An additional factor that is commonly used is long-term salary replacement, extending beyond the employable years. There are also universal life policies designed to focus on offering both death benefit coverage as well as building monetary value, though others mostly concentrate on providing guaranteed coverage upon death.
To help pay for the costs of a loved one’s passing, to secure the family’s future and to plan for estate considerations, look into obtaining an insurance policy for you and your family today.