Life Insurance: A Selfless Gift to Those Left Behind

Posted by on Dec 28, 2017 in Life Insurance | Comments Off on Life Insurance: A Selfless Gift to Those Left Behind

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Insured or uninsured question and pen to check boxLife can be complicated. The older we get, the more complex it can become: more assets, more dependents, more decisions to be made in the event our own lives are unexpectedly cut short. If you were suddenly gone tomorrow, would your family be financially secure without your income? The answer may depend on two simple words: life insurance.

Though it’s not a fun topic to dwell on, life insurance is important to understand. What is it? Who should have it? Why? What type? Am I set for life if I already have a life insurance policy? These are all critical questions that deserve a clear understanding and frank discussion.

What is life insurance?

A life insurance policy provides financial protection for your loved ones when you pass away. Simply stated, it is a contract between a policyholder and an insurer in which the policyholder pays regular premiums to the insurer and, in the event of the policy holder’s death, the insurer provides a monetary benefit to the policyholder’s designated beneficiary. This lump sum can help ease financial burdens like loss of income, funeral expenses, and more in the event of the policyholder’s death.

Who should have life insurance?

It’s inaccurate to think only household breadwinners need life insurance. Ask yourself whether your passing will impact others’ finances. Here are a few examples of “yes” answers:

  • You own a house with a spouse or partner, and your income helps pay the mortgage. Losing your income may affect your partner’s ability to make those mortgage payments.
  • Your partner or spouse works full time, and you take care of the home and kids. Even though you aren’t directly generating income, without you to provide home and childcare, your partner or spouse would have to pay for them in your absence if he or she plans to keep working to generate income.

If your passing would negatively impact your loved ones’ financial stability in any way, you should consider some type of life insurance policy.

What types of life insurance are available?

Once you determine that a life insurance policy is in your best financial interest, the real work begins in deciding which type. There are two main types of life insurance:

  • Term life insurance — This type covers a policyholder for a set number of years: 10, 20, 30, and so on. If you live until the end of your policy’s term, nobody receives a payout. You simply won at the game of life! This is typically the simplest, most affordable life insurance to obtain.
  • Permanent or whole life insurance — This type is designed to cover you for life and accumulate cash value over time. If you decide to surrender your policy later in life, you can cash out the policy value instead of receiving a guaranteed death benefit. This type is more complex and can cost much more but is often the best choice because of the security it offers.

Ultimately, when shopping for life insurance, you want to find a balance between adequate coverage and affordable premiums. If you’re unsure of how much coverage you need, an experienced insurance agent can help you assess your coverage options and related premiums.

While some life insurance can be quite pricey, it’s surprisingly affordable in many cases, especially for younger, healthy individuals interested in term life insurance policies. A healthy, non-smoking 30-year-old male may pay as little as $500 per year or less for a term life insurance policy with a $1 million death benefit. Smokers or those with health problems are likely to pay twice as much or more. It all depends on age, current health and lifestyle profile, as well as coverage level.

life insurance

Once you get life insurance, are you set for life?

Life insurance is not a “get-it-and-forget-it” commitment. As our lives change, it’s possible our life insurance policies should, too. If you’ve moved into a bigger home, for example, did your mortgage payment stay the same? If it’s significantly more, you may want to look at a policy with a higher death benefit. If you’ve made significant lifestyle changes such as dramatic weight loss or reversed certain health conditions like Type 2 diabetes, you may qualify for a better policy rate.

If you have a term life insurance policy, be sure you know the term and when it expires. If your term is set to expire, you have options to consider to continue your coverage into the next decade and beyond. Many policies offer various options when set to expire. These can include converting the term policy to a permanent policy; replacing the term policy with a less expensive one; paying a renewal premium; or decreasing your death benefit. Your age and health status will likely determine which option makes the most sense.

No matter your age or stage of life, life insurance options are available. When it comes to navigating the maze of life insurance options available, an insurance expert can help you take the right path given your specific goals and circumstances.

Contact a Concklin Insurance expert today for a personal evaluation of your life insurance options.

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