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052322 Why Should You Consider Buying Life Insurance, And What Kind?

Why Should You Consider Buying Life Insurance,

And What Kind?

 

Life insurance is a financial product that helps ensure your family is

taken care of after you die. This insurance policy will pay out to your

children, spouse, partner, or whomever you designate as the beneficiary.

Life insurance helps cover important expenses such as housing,

education, debt, and funeral costs. It helps replace the income that is

lost after someone dies, which is especially valuable when the primary

income producer for a family dies unexpectedly.



How does life insurance work?


A life insurance policy is a contract between the life insurance company

and the policy holder or insured, who has an interest in providing

financially for someone else after they pass away.

The policy holder pays the cost of the policy by paying a premium either

monthly or annually. After the insured passes away, the life insurance

company pays the death benefit to the designated beneficiary. That's

usually a family member, but the decision is up to the insured.

Keep in mind the owner of the life insurance policy, who is responsible

for the payment of the premium, does not have to be the insured.

Someone else (Must have an insurable interest) could take out a policy

and make the payments for the insured, whose life the policy is based on…

 though it is much more common that the owner of the policy and the

insured are indeed the same person.



The two main types of life insurance policies

Term life insurance  


Term life insurance provides coverage for a set period of time, usually

10, 20, or 30 years. It is less expensive than permanent life insurance.

This coverage is also called “pure life insurance” as it protects your

beneficiary in case of your premature death. The payout and the premium typically do not change during the policy.

Look for term coverage based on when you would be leaving the work

force so if the death is premature, the benefit will cover your loss of income. Ideally, you will outlive the term period and by then you will have money

saved in retirement accounts, your house may be paid off, your children will

be out of the house, and you will not need life insurance.

 

* Plumlife allows conversion at the end of the term period prior to age 70 to

a whole life or universal life plan.



Whole life insurance


Whole life insurance is the most common and simple type of permanent life

insurance. A whole life policy is more expensive than term life.  

A whole life insurance policy is guaranteed to pay the beneficiary the death

benefit whenever you pass. The premium typically stays the same and the

cash value of the death benefit will increase. The premium money paid into

the policy is invested and will grow the value of the death benefit over time.

The gain in the death benefit on the policy is tax-deferred so you won’t have

to pay taxes on the increase.

Keep in mind that a healthy lifestyle is a factor in how much you will pay in

premiums for a policy. A person who smokes or has serious health issues

could pay three times more in premiums or be denied life insurance.

 

* AIG American General offers a Guaranteed Issue plan starting at age 50.

You cannot be denied coverage up to 25 K.

Finally, it is recommended that you discuss all your life insurance options

with a reputable insurance broker.

 

Author: Kirk Fox  

https://fflheartland.advisorprofiles.com/article/249929

 

Edited by Hayden Childs *

 

I offer both products mentioned in this article.

 

Contact Me Today!

 

Hayden Childs

Alabama Licensed Agent

(205) 269-1382

 

 


 

 

https://www.helloplum.com/agent/childs-806

 

 

 

 

 

 

 

 

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