Life Insurance is a new forte for me. Although, I have more than 8 years of experience in Property and Casualty Insurance, Life Insurance was never a part of it, until quite recently. There were many things I didn’t know about it. The volume of how much I didn’t know (and still don’t know) is truly amazing considering my experience within Insurance industry for the past several years!
Why and When to Buy Life Insurance? Read on below to get your answers.
Why and When to Buy Life Insurance
Life insurance will protect you from the costs associated with death. You pay the premium into a pool which is managed by an insurance company. This money in the reserve is used to pay off death benefits when a Life Insured dies.
There are 2 kinds of Life Insurance products- Term Insurance and Permanent Insurance.
In its simplest form, Term insurance is usually cheap and designed to fill a specific need for a specific period of time.
You would require this type of Insurance for taking out a mortgage, usually. The idea is that the mortgage will be paid off even if your death occurs in between. The cost for Term insurance is cheaper when you are young, but it gets expensive as you grow older. Normally, it becomes unavailable at a predetermined age as well.
There is no cash value for Term Insurance; it’s just like renting an apartment. It is used for a specific purpose and once it is satisfied, your insurance is considered used up.
This type of insurance is expensive and versatile. This product is created to stay in force for insured’s life time. Permanent insurance products are used when there is a need for estate planning or estate preservation.
There are three types of permanent insurance.
Features guaranteed premiums which may be paid for a limited period, or for the whole life of the life insured. Considered more expensive than Term Insurance, Whole Life’s cost will not increase though. Coverage is in force either until the policy is terminated by the insured or until the death of the life insured.
Universal life offer great flexibility to the policy owner. He or she will manage the policy reserve, the amount of premiums, and the coverage in force. Some what complex, you can see it requires a degree of active management by the insured.
Term to 100
Term to 100, usually abbreviated as T-100, is permanent insurance with no, or very limited, cash values. Due to this reason, it is less expensive. As it is more of a basic product, Term to 100 does not give the policy owner much flexibility.
Are you with me so far?What do you think?
Do you have Life Insurance? Or you think it is not necessary? Why or why not?
Hope today’s post serve as thought starters on Why and When to Buy Life Insurance.If it put you on a mindset to analyze your finances and ponder income loss situations (if it ever happens, God forbid), I would say mission accomplished!
How would your family survive? Is there a contingency plan in place? If not, no worries. Not taking action is dangerous than taking action late.
Secure your family’s financial future starting today so that they continue to live comfortable even when you are not around.
In another post, I will cover yet another side of Life Insurance-Accident and Sickness products. Watch this space!
Until then, Stay Protected everyone…