Life Insurance is a gift for your loved ones. It’s the final step in securing the financial health of your family when you can no longer provide for them. There are different types of life insurance, each with options to customize based on your needs, circumstances, and stage of life.
Shopping for the right life insurance policy can be overwhelming, as there are many options. However there are two things that every policy has in common. They all require a beneficiary and a coverage amount otherwise known as the death benefit.
There are two types of life insurance; temporary, also called term, and permanent.
Permanent life insurance — such as whole life or universal life – can provide lifetime coverage. Most types of permanent life insurance include the ability to accumulate cash value which can be used while you are still living.
Term life insurance provides protection for a certain period. Term life is usually the cheaper option and has no cash value.
There are three main reasons for someone to get life insurance:
- To pay for burial and final expenses. Funerals are not cheap, averaging over $10,000.
- To replace income. Upon your death will your spouse and children have difficulty making ends meet. This type of policy helps maintain your family’s standard of living.
- To leave an inheritance or transfer wealth. Life insurance can help ease the financial burden on your family of keeping a roof over their head.
Depending upon what phase of life you are in will determine whether you need term or permanent life insurance. Are you young and married with small children? This is when you need the most death benefit from your policy because of the need for income replacement that can cover the expenses of a growing child. After your children are grown and leave the nest, you may have the option to convert your policy to one that is more appropriate for your new situation.
Life insurance covers all causes of death. What is covered? An accident such as a car crash, heart attack or disease, homicide, illness, old age, war, or terrorism.
There are several factors that determine your premium rate, but the younger and healthier you are, the less you will pay. Age is the most important influencer, but the following are also considered while calculating your rate:
- Gender (women have a longer life expectancy)
- Marital status
- Results from medical exam and lab work
- Family medical history
- Where you live
- Lifestyle: smoker or not, alcohol consumption, risky hobbies
Life insurance riders are supplemental coverage to your policy that comes at an additional cost while giving you some financial protection while you are still alive. This is known as a living benefit that can be built into your policy, and can include:
- Disability income rider
- Waiver of premium rider
- Term Conversion rider
- Accelerated death benefit rider
- Long-term care rider
- Critical Illness rider
- Child rider
How do you choose the right life insurance policy? There are so many other variables involved in choosing life insurance coverage. With all the options available, it is best to consult with an experienced insurance agent who knows all the different policy specifics and can help you secure your family’s financial future. Contact the life insurance team at Charles Leach to learn which life insurance policy is right for you. Call 888-275-3224 and ask for Nate. Protecting you like Family.