Life Insurance: What You Need to Know

Prioritize making time to review your coverage so that you are properly insured. If you’ve never taken a life insurance policy, now is a good time to consider recent life changes, such as marriage or a child, which would make it important for you to have a life insurance policy.

To help get you stated, take a look at answers to these basic questions about life insurance.

Do I need Life Insurance?

The short answer is just about always, yes. Parents of a baby should even consider having life insurance for their child. If a heartbreaking and unforeseen circumstance should arise, a family shouldn’t have to shoulder the burden of funeral costs completely out-of-pocket. As you get older, your life insurance policy should increase to cover more than just funeral costs, but also make up for the loss of income your family will experience. The goal of your life insurance policy should be to leave your loved ones in a stable financial situation, so that their emotional loss isn’t compounded by a financial loss.

How much do I need?

There are many considerations for how much life insurance is right for your unique situation. Begin by using some of the free life insurance calculators that are designed to give you a good starting point and also make you aware of things you may be overlooking. The main consideration will be assessing the financial needs of your dependents. What standard of lifestyle do you want to maintain for them? Who will cover medical expenses and funeral costs? How much debt, such as student loans and mortgages might you leave behind? Your local life insurance agent can walk you through all of the details and options available to you.

Are there different types?

Yes, there are quite a few different types of life insurance policies, are structured to provide unique benefits depending upon your life situation. Term Life Insurance provides only a death benefit without any cash-value component and is the lesser expensive option. Permanent life Insurance offers as a cash-value account which offers a return-on-investment in the case you do not use your life insurance policy during its duration, thus making it the more expensive option. Additionally, Whole Life Insurance and Universal Life Insurance are two subdivisions of Permanent Life Insurance. There is also Variable Life Insurance. Navigating all of your policy options may see like it daunting task, but a knowledgeable insurance agent will help make things simple for you!

Why would I want to add a rider?

Riders can be added to your life insurance policy, for an additional fee, to help safeguard you and your family from a variety of unexpected and unpleasant situations. For example, an Accelerated Death Benefit rider (aka Living Benefits rider) pays the benefit early if you become terminally ill. An Accidental Death Benefit rider pays an extra benefit if you die as the result of an accident. A Long-term Care rider pays for long-term care expenses should you need in-home care. And a Waiver of Premium rider waives premium payments should you become totally disabled. There are many more riders and benefits you can discuss with your insurance agent who can advise you on whether they are something you should add to your policy.

What is the underwriting process?

The underwriting process is designed to fully assess your health and lifestyle. You should expect to complete paperwork, answer questions, and a medical examination is common. If you do not need a life insurance policy in the millions of dollars, you can likely find simplified life insurance which does not require such an intensive process. Keep in mind that these policies, though easier to obtain, tend to cost more in the long-run and are limited to a shorter amount of time.

Is it expensive?

Like anything, the cost of your life insurance will be relative to the amount of coverage wish to obtain and for the length of time you’ll be covered. Another big consideration is your age and overall health, as assessed by your interview and medical examination. Your insurance agent will be a key resource to help you find the right balance between cost and coverage to fit your needs.

The important takeaway is that even if you can only afford a small life insurance policy, should something ever happen to you, you will have the peace of mind knowing you have left your loved ones with a reduced financial burden.

Have additional questions? Please reach out so I can help you find answers!