Many people hear about life insurance all their lives without knowing much about it until they get older and start worrying about who will inherit their estate. In some ways, life insurance works like a will in terms of issuing benefits, but it also has advantages a will doesn't provide.
Here are key facts you need to know about life insurance-
Each life insurance provider is different and has its own methodology for designing coverage. At the same time, many policies generally operate the same way. A policyholder pays a monthly premium over a specific period. These funds are used by beneficiaries named in the plan to pay the policyholder's final expenses, such as outstanding debts and funeral costs.
When you set up the policy, the size of your death benefit payout is up to you- that is, you have to decide how much you want to pay out to survivors. Various factors affect what you pay monthly, such as your gender, age, health, and the place where you reside. You can control certain factors, such as coverage limits and deductibles. To lower your monthly premium, you simply need to raise your deductible.
While there are two main types of life insurance (term life and permanent life), there are variations and hybrid options as well. Here's a look at the meaning of term life versus permanent life insurance.
This type of life insurance is somewhat self-explanatory since it's only for a set term of years. The main benefit of term life insurance is that it's cheaper than permanent insurance.
As the name suggests, permanent life insurance has no deadline. It serves the policyholder not just with a death benefit but also access to funds while they are alive. That means a permanent life insurance account is similar to a savings account. Not only can you withdraw cash whenever you want, but you can also borrow money against the equity you've invested in your plan.
Here are some of the most common reasons why people buy life insurance:
When the head of a household, who is the sole income provider, dies, it can be emotionally and financially traumatic for the family. It can disrupt the family's flow of regular income. However, a permanent life policy replaces this income.
A spouse may need physical and emotional assistance from a caretaker after their loved one dies. Customized life insurance policies pay for this care.
A permanent life plan grows over time based on market investments. It's an excellent way to supplement living costs.
Funeral costs can be extremely expensive, but a term life or permanent life plan covers these costs.
Everyone should at least think about a life insurance policy, especially if you are married and have kids.
Learning how to supplement your retirement income can give you peace of mind knowing your family will have a stable financial future after you're gone. Contact our team at Corbett & Associates for more information on getting a suitable life insurance policy that protects your family.