Most times, having a conversation about life insurance can seem very morbid. Who likes talking about death? But you must have that conversation so that you can keep your family safe.
What’s worse is that not many people understand life insurance. Well, here’s a quick guide to help you navigate this conversation so that you don’t have to worry about the future of your family if you pass away.
What is Life Insurance?
Life insurance is an agreement made between you and your selected insurance provider to issue tax-free lump sums of money to your acknowledged beneficiaries in the event of your death if the policy is active. This is called a death benefit.
By paying your monthly premiums, the insurance makes sure your family is covered by the lump sum, depending on how much the sum was agreed upon.
The Different Types
Several main types of insurance can be utilized for your life insurance. Choosing the best one for your situation could be the difference between your family surviving or suffering after your passing.
Term Life Insurance
A term life insurance has several stipulations. The first is that it pays the death benefit to your beneficiaries only if you pass away during the policy term. So the policy must be active, and it only pays until you turn 95.
Unfortunately, the policy has no value at the end of its term.
Permanent Life Insurance
Unlike the term life, the permanent life insurance policy pays the death benefit to your beneficiaries no matter what as long as the policy is active. SO if you passed away prematurely, your family wouldn’t have anything to worry about.
It also includes a savings feature alongside the death benefit and can accumulate cash or loan value you can withdraw, borrow against, or invest if you so choose.
Why You Need Life Insurance
Life insurance isn’t mandatory to have. But there are several reasons you should consider it as you get older and have a family:
To Keep Your Family From Going Under
Families often are hit hard by someone’s passing, especially if that person is a contributor to the financials of a household. It can be difficult to stay afloat when depending on multiple incomes.
The death benefit payout makes the burden easier on the family, and they can use it in any way they wish as long as it passes the 7-day test. for more information on that, go to paradigmlife.net/blog/understanding-modified-endowment-contract-mec/
To Help Pay Final Expenses
Another difficulty is just paying for funeral and final expenses.
The median cost of a funeral is almost $8,000. Unfortunately, most Americans don’t have that kind of money saved up to handle such a large expense on top of outstanding debts.
Life Insurance policies are created to help with these sorts of expenses as well.
Understand Life Insurance
Although it might be difficult to understand the hardships of death, it’s not hard to understand life insurance. Your family should be safe if you have to leave them.
Leave your family some support, consider getting life insurance today.
For other informative articles like this one about insurance, be sure to browse the rest of your blog.
- How to Be a Good Landlord - November 21, 2022
- How Can You Save Money When Buying Homeowners Insurance? - November 20, 2022
- What is a Reverse 1031 Exchange? - November 17, 2022