When choosing a life insurance policy to protect your family’s financial well-being, there are a number of things to consider. You need to understand the basics, such as how this type of insurance policy works, coverage types, why it’s beneficial to have, and how to choose the right plan for you and your family, before making any decisions.
How Does Life Insurance Work Exactly?
The purpose of a life insurance policy is to provide a death benefit to your pre-selected beneficiary, which in most cases is a spouse, child, or other family member. Upon your passing, your beneficiary, or your licensed insurance agent, would submit a claim to the insurance company basically informing them of your passing. Once the insurance company receives all the required documents, the beneficiary would receive a payout based on the terms of the life insurance policy.
Understand the Two Main Types of Life Insurance
There are several things you should consider when purchasing the best life insurance policy for you, and understanding the two main types of life insurance, permanent and temporary, is a good place to start.
Permanent Life Insurance
A permanent life insurance policy sounds exactly like what it is: you’ll be covered for the entirety of your life, so long as you are paying the premiums. This type of policy gets paid of regardless of the age at passing as long as the policy is up to date.
Two of the most popular types of permanent insurance are whole life and universal life. Most whole life policies provide a level premium, so the rate that you pay stays the same for the entire policy. With most life insurance policies, you can get a larger death benefit by passing a medical exam. Other permanent insurance policies available include universal life and variable universal life.
Universal life and whole life are the two most common types of permanent life insurance. Whole life insurance is more standard, and you pay consistent premiums throughout the life of the policy. In addition to lifelong protection, universal life insurance, which has flexible premiums, has a savings component (called “cash value”) in which you can borrow or withdraw against the insurance policy’s value and your cash value earns interest.
Temporary Life Insurance
A temporary life insurance policy, sometimes also referred to as term life insurance, is issued only for a certain amount of time, typically from five to 30 years.
Term life insurance policies stipulate a death benefit to your assigned beneficiary only if you pass away during the pre-determined term of your temporary policy, until the age of 95.
The majority of temporary life insurance policies are level premium term policies, meaning your premium will remain consistent for an established period of time. There are a few other, less common, types of term life insurance, such as decreasing term coverage and annual renewable term coverage. However, these are typically not the right option when looking for the best protection for your family.
As you review various policy options, consider the length of time you would like to have coverage.
Choosing The Best Life Insurance Policy for Your Family
Life insurance can help give you peace of mind and secure what matters most for all ages and stages of life.
Protect the life you want for those that matter most. This is what GWK Insurance is here for. We make it a point to educate, inform, and assist our clients in the process of making the right insurance choices.
Contact us today to start evaluating life insurance policies that can help provide financial security for your loved ones by covering expenses like the mortgage, college tuition, and other everyday living costs.