What to Look for in a Life Insurance Policy
Many people decide to take out a life insurance policy because they know without their income, their family would struggle to make ends meet. Life insurance can give you and your family some peace of mind knowing they will be financially stable if something happens to you. There are many different life insurance policies you can invest in, making it difficult to know what to look for. Below, you will find a few things you should look for before deciding on a policy or company.
The Type of Policy
There are two different types of life insurance policies–term and whole life insurance. Term life insurance is generally more affordable, as it provides coverage for just a period of time. This is typically the preferred option for people who have kids, as the coverage term can end once all kids are independents. With whole life insurance, it can be more expensive, as it covers you for your entire life. However, your beneficiaries will benefit from your life insurance no matter when you die, which is why many people prefer whole life insurance.
As mentioned above, term life insurance is usually less expensive than whole life insurance, as it has lower premiums. It is best to look at the cost of each insurance policy and consider what you can afford long-term. You can usually find term and whole life insurance policies that offer the same coverage, just with different lengths of time they cover. So, you will want to think about what you can afford to pay each year, and if it is worth it to be covered for your entire life, or just when your kids are still dependent on your income.
The Payout Period
The period of time in which an insurance company pays the beneficiaries of a life insurance policy can vary. Typically, it should only take 30 to 60 days for beneficiaries to receive the money, but some policies make this process more difficult.1 There is also something called the contestability clause, which most policies have written in the fine print. This is where the insurance company may investigate the claim if the policyholder dies within two years of taking out the policy. It can take up to a year for this investigation to be done. However, if there is no fraudulent behavior, your beneficiaries will be able to receive the payout.
If you are struggling to decide between life insurance policies to provide for your family if something happens to you, feel free to contact us with your questions. Our financial professionals can take a look at your individual situation and provide you with information to help you decide which life insurance policy might be best for you and your family.
1 “Claiming a Life Insurance Benefit”, AARP
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.
PPG-139592 (1/20)(Exp. 9/20)