Shop Around To Find The Best Life Insurance Coverage For You
There are many ways to save money when buying life insurance, but they don’t always entail paying a lower premium immediately. Nonetheless, life insurance is a very competitive business, and, therefore, quotes can vary significantly between companies. Consider that what’s important is that you get the coverage that fits your budget and financial goals. If you choose to work directly with an agent, make sure your agent knows about your financial situation and takes time to explain your options in easy to understand terms.
Can You Switch To A Better Deal
If youre young and/or healthy, it might be worth seeing if you can a better deal elsewhere.
But as you get older or develop medical problems, you might find its cheaper to stick with a policy you bought when you were younger.
If you decide to switch, make sure you dont cancel your existing policy until the replacement policy is fully set up and you have made the first monthly payment.
When youve cancelled a policy, you cant change your mind.
What Is Life Insurance And How Does Life Insurance Work
The history of life insurance goes way back. These days when you purchase a life insurance policy, you start paying to a life insurance company. In return, the life insurance company agrees to pay your beneficiary or beneficiaries a lump sum in the event of your death. There is life insurance for adults, children, veterans, seniors and folks with disabilities. There is term life insurance, limited pay life insurance, cash value life insurance, supplemental life insurance and permanent life insurance. In addition to monetary benefits, the purpose of having life insurance coverage is to give you, the life insurance policy holder, peace of mind. Having it means knowing that your life insurance pay-out will soften the financial blow of your death. So do you need it? Is life insurance worth the cost for you? Here are some questions to consider.
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Why Buy Life Insurance
There are several common reasons for buying life insurance, including:
- To replace your income for any dependents who rely on that income.
- To pay for funeral expenses and other final expenses.
- To provide a financial legacy for heirs.
- To pay estate or inheritance taxes.
- To provide a donation to a charity.
- To create a savings vehicle if there is, or may be, a life insurance need.
Taking Up A Risky Hobby
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
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You’re Planning To Get Married
There are some questions to consider before going down the aisle. Like, will you have individual or joint life insurance policies?
Certain life insurance products, known as joint life insurance policies, are geared towards married people. Joint life policies are beneficial for high-wealth couples seeking to lessen the impact of inheritance and estate taxes on their beneficiaries, according to Mark Williams, CEO of Brokers International.
If either person is bringing children from a previous relationship into the marriage, there should be a discussion about protecting the assets and inheritance of the children. For life insurance policies where the child is to benefit, a trust should be established because a child won’t be able to access the proceeds if they’re a minor.
Do You Need Life Insurance
Life insurance pays out when you die not when you lose an income due to illness or disability.
This is what income protection policies are for find out more in our guide What is income protection insurance
Its suitable for you if you have:
- dependants, such as school-age children
- a partner who relies on your income, or
- a family living in a house with a mortgage that you pay a life insurance policy can provide for them if you die.
You might also want a policy that covers your funeral expenses.
You dont need it if:
- your partner earns enough for your family to live on
- youre on a low income and could qualify for State benefits.
Check if you already have it through your work. Employee packages often include death in service benefits that will provide an amount of cover thats linked to your salary.
Depending on how much its worth, you might not need an extra life insurance policy. But remember that if you stop working for that employer, youll no longer be covered under their policy.
You might also need to think about whether receiving a payout will affect any means-tested benefits your dependants might otherwise qualify for.
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Term Life Insurance Policies
These run for a fixed period of time, known as the term of your policy, such as five, ten or 25 years. They only pay out if you die during the policy.
There are three kinds of term life policies.
Who Should Get Life Insurance
You should consider getting life insurance if you have loved ones who are financially dependent on you. So if you have a spouse, children , have a civil partner, or any other financial dependants such as elderly relatives, the pay-out from a life insurance policy could prove invaluable in helping them meet ongoing living costs, from covering the mortgage to paying for school fees and utilities.
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Brush Up On Your Latin
Say you have two sons and you name them both as your beneficiaries, to split the payout equally when you die. Meanwhile, one of them has two daughters and the other has no kids. Now say the son with the two daughters dies before you. When you die, do you A) want half of the payout to go to one son, with the other half split between your two granddaughters? Or do you B) want your son and two granddaughters to split the payout three ways?
If you answered A, you want your life insurance beneficiaries to inherit per stirpes. If you answered B, you want your beneficiaries to inherit per capita.
Thinking And Planning Ahead
Life is unpredictable, and there is no way for people to guess when things may happen to them. Regardless of who you are, a single person or a part of a family, there is someone you are leaving behind. Unfortunately, this also means your loved ones have to take on your debt during their grieving period. Life insurance can help them with these costs, which can create peace of mind during a hard time. See the many benefits of investing in life insurance as a single individual.
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What Determines My Eligibility For Term Life Insurance
In general, the main influencer of life insurance term length eligibility is age. Older age comes with a higher risk of health issues, so your options might be limited to shorter term lengths if you apply for a policy at an older age. If you do qualify for a longer term length when applying at an older age, note that your age combined with the longer term length will cause the policy to be more expensive.
Why You May Need Life Insurance
If you have a spouse and kids, ask yourself: What do you want to happen to them when youre gone? Chances are, youd like for them to maintain their current lifestyle, as opposed to dealing with financial uncertainty or having to move out of their home.
If you have dependents, you probably need a life insurance policy. It can help settle debt obligations , allow your dependents to stay in the family home, and cover everyday living expenses. Beyond that, it can pay for future life expenses .
If youre single and no one is actively depending on your income, a life insurance policy is still worth considering. The death benefit may be enough to take care of any debts, cover those inevitable end-of-life expenses and provide financial support for your loved ones or favourite charities.
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You Want To Leave A Legacy
Life insurance isn’t just for providing for family it can be a way for you to leave a legacy when you pass away. Naming an organization you care about as your life insurance beneficiary would allow you to make a large donation when you pass away, and you can even split your death benefit between multiple people and organizations.
Who Needs Life Insurance The Most
If youre wondering who needs life insurance the most, the following list may help. Although the list is not exhaustive, it describes personal scenarios that could potentially benefit from life insurance. If one of these categories describes you, you may want to talk with an insurance agent about purchasing a life insurance policy.
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How To Choose The Right Provider
The process of buying life insurance can be intimidating and complicated.
This is mainly due to the traditional structure of the business sector as a whole. At ConsumersAdvocate.org, weve evaluated traditional and newer life insurance providers alike by five factors.
From rock solid, stalwart American icons like State Farm and New York Life to relatively new, Internet-based comparisons services like PolicyGenius and SelectQuote Life, there are more options than ever for buying life insurance policies.
With that in mind, we’ve reviewed every company and compiled the results into a list of the top 10 life insurance providers in the industry.
Do I Need Life Insurance
5 Min Read | Nov 3, 2022
When you think about the important things in life, getting a consistent paycheck is one of them, right? There are bills to pay and mouths to feed. So, how would your family carry on if something were to happen to you?
You might think, Life insurance. But maybe youre confused about the concept and wondering, Do I even need life insurance? Or maybe you dont really know what it is, which kind is best, or how much coverage you need. Well, your questions around life insurance are understandableeveryones trying to sell you some! And you might be told you need it when, in fact, you dont.
Lets set things straight right now . . .
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When Its Important To Have Life Insurance
Its worth considering life insurance if you have people who depend on you financially, such as:
- a partner who relies on your income or your contribution to the household
- children or young dependents
- other dependents who rely on you as a caregiver
Having life insurance means that your family will receive money after youre gone. This money can help take care of them at a difficult time. The money could be used to:
- cover new costs, such as childcare
- replace your income so your family can continue to pay the household bills
- pay off big debts like a mortgage
Every familys circumstances are different. Its important to think about how yours would change if you were no longer around, as hard as that may be.
Does Age Affect Your Insurance Premiums
Yes. The older you are, the sooner you are likely to pass away or encounter health problems. With that higher risk comes higher premiums. However, if you have term life insurance, your premiums are set for the duration of the term its at the time of renewal that they may increase. And with certain permanent life insurance policies, your premiums remain the same for lifebut this means paying more at a younger age.
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Types Of Life Insurance
There are three broad categories of life insurance term life, whole life and universal life insurance.
Life insurance policies come as bundled or not bundled with investments. Term life insurance is typically not bundled with any investment products and only offers protection against death, permanent disability and, in some instances, critical illnesses. They are not a vehicle for investment and do not possess any cash value.
Whole life and Universal life Insurance, on the other hand, are often bundled life insurance policies. They not only offer protection against the aforementioned situations, but also offer exposure to markets and possess a cash value.
Life Insurance Provides Cash When You Need It Most
Your life insurance policy can deliver a specified sum of money when you need it. Upon your death, your family will receive your policy payout immediately. And that death benefit is generally not subject to federal income taxes. For example, a $500,000 policy provides $500,000 in death benefit proceeds directly to your beneficiary.
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Other Things To Think About
The more practical discussions you can have with your family now, the better it can make a difficult time just that little bit easier.
So, while youre on the subject, you may want to make sure your family knows:
- where they can find a copy of your will
- contact details for executors and the solicitor
- details of any financial plans, policies and covers
- how to get hold of other important paperwork, such as property deeds, bank statements and pension statements
- if there are any joint debts that may need to be settled, such as credit cards or loans
Its not easy to think about life insurance and what will happen after youre gone. Its a selfless act to think of others without any benefit to yourself. But it can make a world of difference to your loved ones and give them one less thing to worry about.
Finding The Right Life Insurance Policy Through Progressive
Determining the best time to get a life insurance policy isn’t always cut and dried. We all experience life at a different pace so answering questions like, “Do I need life insurance after 30?” or, “Do I need life insurance after 60?” depends less on your age and more on your circumstances at that age. You might need life insurance after having a baby when you’re in your 30s or if you’re taking care of an ailing parent when you’re in your 60s.
Pro tip:
When considering picking up a life insurance policy, learn the different types of coverage options so you can determine which is best for you.
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Is Life Insurance Ever A Legal Requirement
No, there isnt a specific law that states that you need life insurance when you apply for a mortgage. Instead, getting life cover is simply a step that most property owners would take as a means of protecting their loved ones if they were to die before the mortgage was paid off.
Simply put, could your partner afford the mortgage without a life insurance payout? Equally, if there is no mortgage in place could your partner cover everyday living costs such as household bills, nursery fees or rent bills.
Additionally, some lenders may insist that you have life insurance in place. If this is a condition of the mortgage, the lender will not release funds until you have protection to cover your borrowing. However, you still have the choice of which insurance provider to choose.
Multiple Your Income By 10 And Add $100000 Per Child For College Expenses
If you want your life insurance policy to help pay for your childs college tuition and other related expenses, multiplying your income by 10 may not be enough. For instance, if you make $90,000 a year and have two children, your total life insurance need would be $1.1 million.
This equation may offer a simple strategy to determine need, but doesnt account for other expenses, assets or unique situations. A life insurance calculator will offer you a more accurate representation of your needs.
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You’re Paying Off Student Loans
If family members helped you obtain your college loans, it may be worth considering a life insurance policy to assist them in case you were to pass away unexpectedly. Even though federal student loans are typically forgiven upon the borrower’s death, that isn’t always the case for private student loans. Upon your passing, the financial responsibility may fall to your co-signer. Having a life insurance policy can help cover the remaining payments if the unexpected happens.
Upon your passing, debts may fall to your co-signer.
Should You Buy Life Insurance
Like with any financial decision, its important to develop a logical framework to make decisions.
Its helpful to remember why you buy life insurance which is to provide financial security for your family in the event of your passing and your family losing the income you provide.
When shopping for coverage, the applicant should confirm that the policy is non-cancellable, meaning that once the coverage is obtained and paid for that the insurance carrier cannot cancel the policy contract at will, Acosta said. Its a terrible thing to have coverage and then find out that the carrier has terminated your contract unexpectedly. You also want to make sure that the insurance carrier has a strong rating and is financially sound. Youd hate to own a policy where the carrier goes bankrupt.
How much life insurance you need will be dependent upon how many children you have, whether you have a spouse that is working, whether your spouse would want to continue working, and at what age your children will become financially secure.
The factors discussed in this article are some but not all of the variables that need to be considered for you to choose the optimal amount of life insurance.
To know the exact amount of insurance you need, its best to sit down with a financial planner you can trust that will walk through all of your specific details and provide an unbiased assessment of your insurance needs.
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