If you are considering the purchase of a life insurance policy to provide financial security for the future of your loved ones in case you pass away, there are some questions you should answer that will help you better understand your need for life insurance, how it works, and what type and amount of life insurance you need.
Five Questions To Ask About Life Insurance
Why Do I Need Life Insurance?
Before you buy any kind of life insurance, think about why you're buying it.
Many people buy life insurance for several common reasons, including but not limited to: Replace Income, Fund College for Kids, Pay off Debt, Pay Off Mortgage Loan, Fund Spouse’s Retirement, Pay for Living Expenses for Family, and Pay for Final Expenses.
What Type of Coverage Is Available?
There are two basic types of life insurance available: Term Life and Permanent Life.
Term life is very popular because it is the most affordable by far. Which means you can afford to buy a lot more life insurance if you choose term life instead of permanent life insurance.
That’s because term life is temporary, providing life insurance for up to 30 years, usually.
The Policy Term is the duration of your coverage. Usually, you may choose a term of 10, 15, 20, 25 or 30 years, to meet your specific needs.
Term life pays out a death benefit upon the death of the insured person, if it occurs while the policy is still In Force. If you outlive the duration of your term policy, the insurance expires, and there is no payout of any benefits.
Whereas, permanent life insurance provides lifetime protection, as long as you pay your premiums. Permanent life provides a death benefit, and builds up some cash value inside the policy over the years.
Permanent life insurance usually costs up to 5-10 times more for the same amount of life insurance, compared to term life.
What If I Don't Die?
It depends on the type of life insurance you own.
If you don’t die during the term of your term insurance plan, then your coverage ends with no payout.
However, if you own permanent life insurance, and keep paying your premiums, then the death benefit will be paid out to your beneficiary upon your death.
How Can I Extend My Current Policy?
Term life insurance policies may offer renewability, which means you may renew your current policy when it expires.
Your renewable policy may offer coverage for a term of up to 10 years, with a higher premium upon your renewal than you paid for your original term life policy.
You won’t have to take a physical exam to qualify for the renewal policy.
Where Do I Buy a Life Insurance Policy?
You may have the option of purchasing your life insurance policy from an insurance agent or broker, through the mail, or by applying online for your coverage.
Some life insurers even offer same-day coverage you can apply for online with no medical exam needed.
What to Consider When Buying Life insurance
Factors to Consider Before Purchasing Term or Permanent Life Insurance
What is the Purpose of a Life Insurance Policy?
Consider what goals you want your life insurance to accomplish.
Term and whole life insurance are the two major categories of life insurance policies., Term life provides coverage for a period of 30 years or less, while permanent insurance provides lifetime protection. If you need life insurance lasting thirty years or less, term life may offer the more affordable solution.
What is Your Budget for Monthly Insurance Premiums?
Make sure you take into account your budget, so you can afford the amount of life insurance protection you need.
The cost of a term life insurance policy is generally much less than a permanent life policy.
How Long Will the Policyholder Need Coverage?
Make sure you buy the type of life insurance policy that will provide protection for as long as you need it, to accomplish your goals.
How Much Coverage Does the Policyholder Need?
Make sure to use a life insurance needs calculator to assist you in determining how much life insurance protection you really need.
That way, you get the coverage you need, but you aren’t paying for more life insurance than you actually need.
Life Insurance Quotes
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Resources:
Questions To Ask When Getting Life Insurance
Can I Buy Life Insurance for My Adult Child?
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