Few people will ever know when they are going to die. Of course, the likelihood of death increases as we age, but many people still pass away at very early ages. Because of this, purchasing a life insurance policy should be at the top of everyone’s to-do list. A person is never too young to take financial responsibility for the costs of their own death.
A life insurance policy can be used to cover funeral expenses, pay off debts, make mortgage payments, and even serve as funds for the remaining family members to pay their living expenses.
Life Insurance Policies
Life insurance policies typically fall into two different categories: term life insurance and whole life insurance.
Term life insurance is a temporary policy that protects an individual for a specified length of time. These policies typically come in five- to ten-year increments. These policies are good for someone who wants to provide protection for his or her family, but does not currently have the financial resources for a permanent policy.
Whole life insurance provides coverage for an individual’s entire life. The policy begins providing coverage the day it is purchased and continues until the insured passes away.
As long as the policyholder pays their premiums, their beneficiaries will receive the cash value of the life insurance policy when they die.
Whole life insurance also qualifies a buyer to purchase an option that allows them to guarantee themselves a specific amount of coverage for a guaranteed cost. Most life insurance companies have permanent, not variable premiums.
Many people feel most comfortable purchasing a term life insurance policy when they are younger, and then replacing it with a permanent whole life insurance policy when their temporary policy runs out. This provides them with a chance to learn about how their life insurance company works and the quality of the customer service the company provides.
While most life insurance policies fall into these two categories, the average life insurance company will offer many options to the whole or term life policies. A person’s life insurance rate can be affected by major illnesses, so many life insurance companies offer policies to reflect special circumstances such as major surgery. Other special circumstances, such as travel or dangerous job assignments, can also be covered by temporary life insurance policies.
Long-term care insurance is a very popular life insurance choice for a lot of consumers, because it provides policyholders with the finances to take care of any long-term medical needs they might acquire. An unfortunate amount of people fall victim to debilitating illnesses every year. Long-term care insurance can offer the resources to cover the extreme medical expenses that develop during a long illness.
Another life insurance policy many couples look into is a survivorship life insurance policy. Life insurance is designed to protect the financial interests of a family, but in many cases, estate tax can severely limit the amount of money left to survivors. Survivor life insurance is designed to protect people from these extreme tax rates.
Survivorship life insurance policies are purchased by couples and only paid when both parties pass away. Estate taxes can be very costly; however, if a couple leaves their heirs a life insurance policy that covers these expenses to the government, the beneficiaries will receive a sum much closer to the actual value of the estate.
Life Insurance Policy Rates
People are all very different. Many people work hard their whole lives and save money for retirement. Others take a little bit longer to find a career that is right for them, so they are hampered in their ability to start saving money.
No matter how much a person is worth financially, it is nice to have something to leave behind. Our desire to impact the world in some way can be very profound. Most of us leave a legacy in the form of family, while others bask in their career accomplishments.
What a person leaves behind is determined by numerous sources. If someone has acquired a lot of wealth, he or she might choose to leave a straight inheritance. Most of us are unable to leave behind a large amount of money, so we buy insurance policies to pay for our expenses and provide for our families when we pass on.
How much a life insurance policy originally costs is largely determined by the person taking out the policy. Life insurance brokers are usually more than happy to work with someone to help them determine the most appropriate amount of coverage. There are many optional benefits that a life insurance agent can help them consider as well.
Mortgage repayment options are very common in today’s debt-ridden society. Smaller debt repayment options are also available with many policies, so a person doesn’t leave student loan repayments to their loved ones as a parting gift.
Life insurance companies also factor in information about the soon-to-be insured such as age and basic health information. These can dramatically alter premium prices. A young, healthy life insurance policyholder is going to be paying their life insurance premiums for a lot longer than a middle-aged smoker with a history of heart disease; therefore his premium would be much less.
Most life insurance companies require a physical from anyone buying a new policy. If this exam uncovers any health problems, the company can decide to deny the application or reevaluate the premiums.
Purchasing a Life Insurance Policy
When considering a life insurance policy, it can be difficult to wade through all of the information now available. An information-packed website or an life insurance broker can make the entire buying experience considerably easier, by helping the consumer become better educated about their prospects.
The combination of a helpful insurance broker and a proper knowledge of the topic can be incredibly empowering for the average insurance shopper. Many life insurance company websites provide teaching tools and coverage calculators to help make insurance shopping easier than ever before.
Life insurance policies are extremely customizable. Both coverage and payment options are usually very flexible. It is almost impossible to find a life insurance company that will not work with you to provide you with as many options as possible.
There are countless life insurance companies available to compete for your business. New companies are popping up on the Internet almost everyday. These companies often provide much cheaper life insurance quotes, but do not necessarily have an established track record.
Conclusion
Many single people do not believe they need life insurance; many married people believe they do. Typically everyone needs at least enough life insurance coverage to see them buried. Life insurance policies can even be tailored to leave money to families, businesses, and charitable organizations. Being aware of life insurance policy options can allow you buy the best life insurance policy, permitting you to leave a legacy that could make you and your family proud.