Life insurance is more than a plan to cover funeral expenses. This unselfish investment serves as a safety net for your beneficiaries—a way to pay for college tuition of dependents, debt or other future obligations.
It is normal to be on the fence about purchasing a life insurance policy. After all, it can be difficult to make payments on something you feel is not beneficial to you in the present. As needless as it seems in this moment, life insurance is vital if you have family members who are reliant on you financially. Here are five important facts about life insurance for both you and your family to consider.
1. A contract is a spoken or written agreement that is enforceable by law. Likewise, a life insurance contract or policy is an agreement between an insurance company and the policyholder. In the event of death, the insurance company is responsible for paying the claim to the beneficiary from the premiums of their policyholders.
2. In the case of an unexpected passing, a life insurance policy could help with the expenses that ensue. These expenses may include debt, mortgages, college tuition, plus the loss of a steady income. When tragedy strikes, you shouldn’t have to worry about financial strain. Life insurance is an essential tool used to combat unnecessary financial burden when coping with the loss of a loved one.
3. There are two types of life insurance: term and whole life. Term insurance has an expiration date in which your beneficiaries will receive a payout if the plan is active at time of death. If the plan expires before the policyholder passes, however, the beneficiaries will not receive any financial assistance. Unlike term insurance, whole life insurance does not rest on the contingency of an expiration date. Beneficiaries can expect a payout if the policyholder has paid their premium. Whole life insurance also accumulates a cash value for the insured.
4. Sure, the internet has abundant information when it comes to choosing a life insurance plan, however, speaking with a live agent may be less confusing. After you have chosen a company and a plan, the application process takes about three to four weeks to process. This process is to determine whether you qualify for coverage. This determination depends on various factors, including age, driving records, habits—good or bad, etc. Speak to a local agent who will answer all your questions before choosing a plan that’s right for you.
5. If money is your biggest concern in your uncertainty to purchase a life insurance policy, speak to a live agent about your options. In a recent survey from the LIFE Foundation and LIMRA, the average cost of a 20-year term life insurance policy for a healthy 30 year old is roughly $9 per month.