Life insurance is a topic that many people spend time avoiding, perhaps because it’s an unpleasant reminder of their own mortality. But, it’s best to obtain a life insurance policy sooner rather than later. This is because you can generally get better deals for higher coverage amounts when you’re still young and in relatively good health. Monthly premiums for most policies go up with age, and traditional insurers typically require a medical exam to determine your classification level before they’ll offer you a policy.
Essentially, life insurance is a way to protect your spouse, children, or other beneficiaries from financial burdens they wouldn’t be able to handle if something were to happen to you. These financial burdens may include outstanding debts like mortgages or college tuition, or they may simply be funeral costs and other final expenses. If you pass while your policy is still active, your beneficiaries receive an agreed-upon death benefit to help their financial situation, and some life insurance policies provide other benefits as well. These days, there are plenty of great sites you can check online for life insurance quotes to find the best deals, or you can speak to local agents to find the best plans and coverage amount for your needs. Here are some of the basic types of life insurance policies you should understand before you go quote hunting.
Final Expenses Coverage
If your family is in relatively good financial standing, and you mainly just want to protect your spouse from funeral costs, this is the plan for you. This is a form of permanent life insurance that pays out a small death benefit to help cover medical costs and basic final expenses. Since the death benefit is smaller than with most other plans, these policies are generally cheap, even for policyholders well into old age. You may even be able to avoid the usual medical exam when you take out one of these policies, so they’re a great option for seniors who haven’t carried life insurance before.
Term Life Insurance
As the name suggests, term life guarantees your beneficiaries a death benefit if you pass during the agreed period of time. When your term life insurance policy runs out, you’ll have the option to renew it, convert it to a form of permanent coverage, or let it lapse. Just be aware that if you pass while the policy has lapsed, your beneficiaries will get nothing, regardless of your previous amount of coverage.
Term life insurance is often good as a starting policy for young families who may have difficulty affording higher premiums. You’ll have coverage for long enough to achieve financial goals, like putting your children through school, and you can stop paying premiums once you no longer need it. Of course, it’s worth keeping in mind that some investors may be willing to purchase a term policy, so you may want to look into that instead of letting the policy go to waste once you no longer need it.
Whole Life Insurance
Whole life is a form of permanent life insurance that can accrue cash value in addition to providing a standard death benefit. You can speed the pace at which the policy builds cash value by paying your monthly premiums ahead of time. This acts as a sort of savings account combined with your insurance policy.
If you find yourself in need of financial assistance, you can borrow against your cash value. Just keep in mind that this is like taking out a traditional loan in that you’ll need to repay it with interest. You can even make withdrawals from your cash value if you really need it, but be aware that taking out too much can eat into your death benefit.
No matter what type of life insurance you need, insurance and investment experts can help you find the best quotes online. Life insurance is a great way to achieve peace of mind, but be sure to read about any exclusions that may affect your policy.