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What is Life Insurance – Why Do I Need it? | Life Insurance Agent
Life insurance is a type of insurance coverage that has been designed to financially protect your loved ones in the unfortunate and untimely event of your death. In this post, we will go into more detail about what life insurance is and why you need it.
What Is Life Insurance?
When you begin a life insurance policy, you are entering a contract in which your insurer agrees to pay your chosen beneficiary a specified amount of money in exchange for the monthly premiums you pay. In the event of your death, your insurer will pay the specified amount to your beneficiary to help protect them financially during this emotionally difficult time.
The specific terms of each policy, including whether your premium is payed monthly or as a lump sum, may vary based on your current financial situation. It is advised to speak with a life insurance agent before making any decisions about your insurance policy.
The Three Main Components of Life Insurance
Your premium payment will be determined by your insurer based on a number of different factors. These factors can include, but are not limited to, your age and any medical issues that you are currently experiencing or that run in your family.
Once these risk factors have been assessed, your premium will be set and can then be paid as a lump sum payment or following a premium payment schedule.
For permanent life insurance, there is a cash value element that is created as a savings account that can be used to amass capital during your life. These accumulated funds are seen by your insurer as a way to lessen their risk of paying out your policy prematurely, and can lessen your premium payments.
The death benefit is that amount of money your chosen beneficiary will receive from your insurer in the event of your death. These funds can be used to cover the costs of arranging your funeral and any medical bills that have been left unpaid. They can also be used to help your dependents maintain their current standard of living, which is especially relevant if you are currently supporting them.
These expenses are important to take into consideration when you are considering your policy and should be discussed with your life insurance agent to ensure you and your family are getting the coverage they need to feel secure even after your death.
Differences Among Policies
As mentioned above, there are many factors that can affect your eligibility for life insurance as well as the terms of your policy.
There may be differences in how to policy is paid, which is determined by whether your policy is a protection policy, requiring a lump sum payment, or an investment policy, requiring a regular monthly payment.
The circumstances under which the policy is paid out can also vary based on your situation. In most cases, your policy will not be paid out by your insurer until your death has occurred. There are, however, some policies that include exceptions for terminal illnesses. This is another aspect of your policy that is important to be discussed with your life insurance agent prior to signing your policy contract.
Why Do I Need Life Insurance?
According to the Insurance Information Institute, life insurance is considered by many financial experts to be the cornerstone of sound financial planning.
If your current income is supporting your loved ones, what will they do when you die? With a life insurance policy, you can ensure that your dependents are still receiving the help they need financially, even after you are gone.
Have you considered the expenses that will be required to pay for your funeral? That is just one of the many costs that will need to be covered following your death. Your current debts and medical expenses as well as administrative costs associated with your estate will also need to be covered. A life insurance policy could help lessen these expenses for your loved ones.
Even if your children may not need your help financially to pay for the expenses listed above, a life insurance policy is a great way to build an inheritance and legacy to leave behind for your grandchildren. This could help them pay for college tuition or other important accomplishments they wish to undertake later in life.
If you would like more information about a life insurance policy, or have questions about what you need to get your policy started, call Ronald Hodgkinson today at (877) 882-6269!