Table of Contents
Main benefits of life insurance
Affordable payments. Life insurance (especially term life insurance), is typically very affordable no matter what your budget. Some plans can be as little as $10 a month. If you work with an insurance broker like Policy Solver, then we will help you get an affordable payment that allows you to get the coverage you need.
Death benefits are tax-free. That means when you get the benefits you are not taxed on the proceeds. So for example, if a life insurance policy has a $500,000 face amount at the time of death of the insured, then the beneficiaries will receive the $500,000 and will not have to pay taxes on that money.
Policy length options. You will have the flexibility to choose between a term length of typically 10 to 40 years. The term most people choose will be based on the number of years they still plan to work. So for example, if you’re 35 and plan to retire at 65, you’d look for a term of 30 years.
Flexibility to change your policy. As life moves on and your situation changes, you’ll have the opportunity to convert your life insurance policy to another one, replace it with something else, or convert it. For example, you might want to convert a term life policy to a permanent policy. It can be tricky and there are some things to look out for, but your licensed agent will be able to help with that.
How does it work?
Life insurance is a promise made between the insured (that’s you, the customer) and the insurer (or insurance carrier as it’s known in the business) whereby benefits are paid to the beneficiary if the insured passes away. The insured and insurer create a contract together that outlines the terms of the policy. Included in those terms the amount of coverage or benefits, the term of the policy, the payment terms (how much it will cost and when you have to make the payment), and what exactly will be covered; so for life insurance it’s the loss of life. In other words, a life insurance policy is a promise made by the insurance carrier to pay the beneficiary of the insured, if there’s an event that happens to trigger to the payment of the policy face amount; which is the passing away (or death) of the insured (or policyholder).
Who needs life insurance?
Life insurance is needed by anyone who has people depending on them to provide for their lifestyle; whether that’s making the rent payment, the mortgage payment, putting food on the table, or other expenses associated with life. Or, it’s needed by anyone who may not have financial obligations to take care of people, but may want to leave them some money when they pass away.
Married people need life insurance, especially the main income producer in the household. If you don’t have a life insurance policy, then if you unexpectedly pass away, then your spouse or domestic partner maybe in a very difficult position to pay the bills, and possibly even pay for your funeral. Having life insurance can ease the worries in this situation.
Have a family?
Is you have a child or a family with several kids, then you should have a life insurance policy. Your kids depend on you to make sure they have shelter, food, clothing and other necessities. The money from a life insurance policy can make sure they will be taken care of if you pass away. Additionally, if you are planning on your kids going to college then proceeds from a life insurance policy can be used to cover those expenses.
The amount of coverage you’ll need to make sure those who are counting on you will be based on your expenses and what you think they’ll realistically need to at least keep their lifestyle for a long enough time to figure out a new income source. At Policy Solver we can help you figure out the right plan for the right coverage you’ll need based on your individual situation.
If you’re single then you might still have people depending on you for income. However, some people might have a relative that lives with them or a whom they take care of by paying bills regularly, and if you’re single and you pass away then those people may financially suffer. Additionally, funeral costs can be more than 5 figures, so having a life insurance policy can help with both of those situations, even if it’s a small one. And you might want to leave a legacy to someone, so having a life insurance policy is one way to do that.
When you’re young it’s a great time to purchase a life insurance policy, even if you have noone depending on you. Since people are typically healthier when they’re younger, and since health is a big factor in how risky you are to insure, the policy rate and terms you are offered will be impacted. So even if you’re still starting your career, or in your mid 20’s, you can always get a life insurance policy, even if it’s a small one. Typically speaking, when it comes to life insurance (especially term), the younger you are when you get covered, the better rate you’ll get. So for example a $500,000 policy might cost a 25 year old $300 per year, but that same policy might cost a 50 year old $1000 per year.
When you’re older
If you’re nearing retirement or in retirement, having a life insurance policy can provide certain important benefits that provide some peace of mind. A life insurance policy may be used to pay for funeral expenses including burial costs (which can be very expensive). It may also be used to help you would like to have something to leave to people when you pass away. Sometimes either single people or older people will take out a life insurance policy as a way to leave a legacy to loved one’s.