Life Insurance: Making A Plan
Thinking about life insurance can be hard but we do it to protect and provide for our loved ones, should something happen to us. Generally, life insurance is a policy that pays a certain amount of money in the event of one’s death. The funds are paid out to the beneficiary listed on the insurance policy.
The process isn’t complicated but there are some considerations. To start, you decide you want to obtain a life insurance policy, you enter into a contract with an insurance company that offers life insurance, and you pay premiums in exchange for a lump sum to be paid to the person(s) you list as beneficiaries in the event of your death.
First Time Life Insurance Buyers Should Consider the Following Tips
1. What and who are you protecting? Consider today and future changes, such as marriage and the purchase of a home. This will help you determine the type of life insurance policy you need.
2. Premiums, how much can you afford? You want to be able to afford the premiums. Keep in mind that some financial protection is better than none.
3. Beneficiaries, people, businesses, charities? You want to make sure that you think through your beneficiaries.
4. The insurance company that you enter into a contract with, are they reputable? It is important to establish a life insurance policy with a financially sound insurance company.
5. Have you done enough research? Take some time to really review life insurance policy options and familiarize yourself with the insurers out there.
6. Have you considered a life insurance agent? Working with someone that is licensed and knowledgeable about life insurance can make a huge difference. We’re here to help.
Types of Life Insurance Policies
Term life insurance- provides financial protection for a period of time, for example: 5, 10, 20 years. Premiums are fixed for the term selected, but usually increase after that term.
Whole life insurance- this is a permanent life insurance policy designed to provide coverage for a lifetime. Premiums on a whole life insurance policy are generally fixed.
Universal life insurance- similar to whole life insurance, universal life insurance is a type of permanent coverage, however; these policies are flexible. With this policy, you can lower or raise premiums and change coverage throughout the lifetime.
Generally, insurers will always pay out death benefits. There are a few situations where no benefit will be paid:
– In a term policy, death benefits will not be paid if the insured outlives the policy.
– The policy lapses or is canceled.
– The insured dies within 2 years of the policy being active/enforced and the insurance company finds fraud on the application.
What Do You Know About Life Insurance Riders?
Some life insurance companies offer life insurance riders. A life insurance rider allows the policy owner/ holder to modify their policy. There are a few types of riders:
Accelerated Death Benefit rider- allows the insured to collect a portion or all of the death benefit.
Waiver of Premium rider- waives premiums in the event that the insured becomes disabled and unable to work.
Accidental Death Benefit rider- offers coverage in the event that the insured’s death is an accident.
It is important to note that not all insurers offer riders.
Have questions? Call us today and we’d be happy to help you make your life insurance plan.
