Talking over life and death matters isn’t fun or easy. But it’s important—especially if you don’t have a plan in place or know the life insurance basics. The last thing you want is to leave your loved ones at a loss because you didn’t prepare for the worst-case scenario.
Need to handle life insurance matters but not sure where to start? We’re here to help! Here are the main facts you need to know about life insurance, so you can get the ball rolling on the basics.
Know the Life Insurance Basics
When it comes to life insurance basics, there are two policies you should know about: term life insurance and permanent life insurance. Knowing the simple distinctions between these two will help you quickly determine which path to take.
Here is a breakdown of each policy so can decide which one makes more sense for you and your family:
Term Life Insurance
Term life insurance provides coverage for a specific period of time. If you die outside that time period, your beneficiaries won’t be eligible to receive the associated death benefits. The good thing though is that you can choose the length of your term period, so you can extend it for 10, 20, or even 30 years.
Not sure how long your term life insurance should last? General tip: you may want the term to last until you retire or be in effect until your youngest dependent no longer needs financial support.
Permanent Life Insurance
Unlike term life insurance, permanent life insurance covers you for the duration of your life. This option is often more expensive than term life insurance but doesn’t increase over time. As long as you pay your premiums, you’ll be protected.
Your Premium Depends on Different Factors
There is a multitude of factors that impact how expensive your premium rate is. For example, young people in good health have a less expensive premium. Other factors like family medical history, gender, and marital status can also greatly impact how much you ultimately pay.
You Should Buy Based on Your Personal Situation
When reviewing life insurance policies, it’s important to consider your family needs and how much you’re willing to pay for your plan. That’s because the type of plan you get should be based on who you’re leaving behind and how much support you want to give them.
Here are two common types of life insurance scenarios you should know as they can help you determine what you ultimately need.
Married with Children
Do you have small children? If so, you may want a life insurance policy that will provide for your family with income replacement as they get older. Term plans can generally get you the most coverage at the cheapest cost.
Married with No Children
Are you a newlywed with no children to care for? If so, you may not need life insurance!
But you may want it if one of you stays at home or doesn’t make enough to support themselves. In that scenario, you can buy a lower death benefit at a cheaper rate with a term policy.
Ready to Plan for Your Future?
Making decisions about life insurance policies can seem daunting. But it doesn’t have to be! Now that you know the life insurance basics you can rest easy knowing your family and loved ones are taken care of if anything occurs.
Did you find the information in this article helpful? Need help with financial planning or risk management? Check out our services to see how we can help you!
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Applications for life insurance are subject to underwriting. No insurance coverage exists unless a policy is issued and the required premium to put it in force is paid. Guarantees are based on the claims-paying ability of the issuing life insurance carrier.
This article is for informational purposes only. Please be advised that this article is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor. PPG-139592 (9/19)(Exp. 9/20)