How to Choose a Life Insurance Policy

How to Choose a Life Insurance Policy

You’ve worked hard your whole life to provide for those you love, giving them the security of a roof over their head and putting food on the table. However, if something tragic were to happen, all that you’ve worked for could be put at risk. This is precisely what life insurance was designed to address, making sure that if you were no longer around your family and those you love most would still be financially protected.

Life insurance can help cover the costs associated with mortgage payments so your family can continue living in their home, paying for college loans, and handling day-to-day living expenses like groceries, pets, and more. Now that it’s clear what life insurance is for, let’s dive into more details about why someone may choose to get life insurance and what types of plans may be available.

Do I Need Life Insurance?

The younger you are, the less expensive a life insurance policy will be, so it may be a good strategy to purchase a life insurance plan as early as you can. Many different people seek a life insurance policy for a wide variety of reasons, from those who are paying a mortgage on their home to cover costs after they’re gone, to parents of special needs children who require the security and additional financial protection only a life insurance plan can provide.

Divorcees paying for child alimony or child support can ensure their payments continue if something should happen to them by investing in a life insurance plan that covers these necessities. The best life insurance plan is one that applies specifically to your needs, making it essential to understand the most common types of life insurance and how they can help you and your family both now and long into the future.

Term Life Insurance

Term life insurance assures an individual of benefits if they pass away during the time period that their “term” life insurance policy is in effect, and this can range anywhere from 10, 20, or 30 years. Most of the best life insurance companies offer term life insurance policies with many different requirements and features that could be suitable for your needs and situation.

These plans are commonly the least expensive form of life insurance, especially if the person is young and healthy as the plan only covers the individual for a specified period of time (or, “term”). After the term is finished, the rate that was guaranteed when the policy was signed is no longer assured and the individual will either need to sign up for a new term or forego life insurance altogether.

Whole Life Insurance

This is a permanent policy, meaning that the term will last as long as the person is alive if they continue making regular premium payments. Some of the biggest benefits of whole life insurance is that your premiums are fixed and will never rise, no matter what market conditions may be.

Another important factor is that those insured may be allowed to take out loans based on their policy or make withdrawals, possibly helping them financially to cover costs or make new purchases. You can be totally assured that your family will absolutely receive your death benefits no matter what if your premium payments are made on-time.

Universal Life Insurance

Universal life insurance, as with whole life insurance, is another form of permanent life insurance that includes an investment savings benefit within its list of features and generally has lower premium payments that are comparable to term life insurance plans.

This type of plan is sometimes referred to as cash value insurance due to the fact that it contains a savings account within the policy individuals can use to plan ahead for their retirement or future financial goals. With this variety of life insurance, each monthly payment made is split into two separate portions — one to cover the cost of the policy while the rest of the money is put toward savings and investing.

Several different forms of universal life insurance exist that include guaranteed, variable, and indexed universal life insurance, and this could be a good strategy if you would like to tie what is left behind to your beneficiaries to market performance. However, fees associated with universal life insurance plans tend to be very high and it may be smarter to get a separate mutual fund or investment strategy instead. Ask an insurance provider for a life insurance quote to find out if this is a good option for you.

Senior Life Insurance

As with most forms of life insurance, senior life insurance is about making preparations for your family’s future long after you’re gone. There are numerous life insurance companies offering all types of plans to choose from, but many seniors may opt for a term life insurance plan, whole life insurance, or final expense insurance (also called burial insurance).

It’s more important for people looking to obtain a life insurance policy who are over the age of 55 to not delay, as you are already at a higher risk than someone who is younger, and therefore could potentially find it more difficult to get the life insurance plan you’re looking for.

If you are only looking for coverage to last a few years at a time, you may want to consider a renewable term life insurance policy that increases in price each year, but that you can cancel any time you wish on an annual basis as needed.

Burial Insurance

When an individual passes away, the prices associate with the funeral process are often nothing to be taken lightly, and many times can come as a surprise to family members or those charged with making sure that everything is done properly and according to plan.

Burial insurance was created to help offset the severity of these expenses, making it easier to deliver the quality funeral the person deserves without forcing their family to break the bank. As with a common savings account, the balance of your burial insurance plan will go up as you keep contributing to your plan, and unlike many forms of life insurance, no medical exam is generally required to get a burial insurance policy.

By Admin