Life insurance: Everything You Need To Know

As new family members are added, and relationships grow, sometimes people think about what would happen to their loved ones if they were no longer around. Life insurance provides financial support if one of the supporting family members passes away. If you were to pass away, you want to know that your family has been provided for and can pay for funeral costs, medical bills, and other expenses they may have like weddings, college, a mortgage, another debt. Life insurance policies provide this financial protection, and there are no requirements as to how your beneficiaries will spend the money. Another way people utilize life insurance plans is through donating to nonprofit organizations and other good causes.

Types Of Life Insurance

There are many life insurance types available, so research is needed to find out which types of insurance are best suited for you. Some types are better for specific situations than others. The three general categories of life insurance are permanent life insurance, term life insurance, and final expense insurance.

Permanent life insurance brings insurance coverage for the entirety of your life. You will have to continue to make your premium payments on time, as outlined in your contract, if your beneficiaries are going to receive a death benefit. This type of insurance is often more expensive than other types of insurance policies like term life insurance. Permanent life insurance also has cash value attached to it. As a policyholder, borrowing from your policy is allowed. Professionals recommend people to only utilize this for a one-time emergency, however.

Term life insurance is also available. This coverage lasts for a limited number of years, such as ten or twenty. If you do not pass away over the term of the policy, no payment is made to your beneficiaries, and you do not get any money back. Term life insurance is a type of policy recommended to most people. This is because people’s expenses tend to decrease when major expenses are no longer part of a person’s life. As children grow up and get older, houses are paid off, and people make more money, the need for a large amount of financial support for family members and loved ones tends to go down. These policies do not have any cash value attached to them.

Another type of insurance coverage available is called final expense insurance. This policy costs less than permanent life plans and term life plans, and the money that this insurance policy brings in this meant to cover the cost of your funeral and burial. This type of policy does not provide a large benefit and is not sufficient for providing for loved ones over a long period.

How Much Life Insurance Do I Need?

The amount of life insurance a person needs can change over time. Many variables are taken into consideration when selecting an amount of life insurance to best suit you and your loved ones. Considerations that should be made include the cost related to burial expenses. Also, you should figure out how much income you will need to cover for your loved ones to maintain their acclimated lifestyle. If you were to pass away within the next year and have determined that your family would need to have a replacement for your income over the next ten years to get situated and not be struggling for money, your plan should include ten years or more of your income, plus other expenses.

In addition, look at how much money you have in savings and investment accounts, whether you have any children, and any one-time expenses you would like to fund, such as college for your children or paying off debts. Adding all of these numbers together will help you get a better idea of how much life insurance you should be purchasing. There are multiple types of plans available, and term life insurance is often more cost-efficient for large amounts of money. As time goes by, your children will get jobs and be able to support themselves. Expenses can often go down over time, so look into getting a term life insurance plan that covers the needed expenses until this happens. Also, keep in mind that permanent life insurance policies are available, though they are often at a higher price point. Each type of policy has pros and cons.

How Much Does Life Insurance Cost?

Life insurance policies can vary quite a bit when it comes to their cost. Shopping around is the best way to save money on life insurance plans. Get free quotes at General to find the best prices for life insurance available.

Another factor that affects the cost of life insurance policies is a person’s health. People who are in excellent health will pay lower rates on life insurance overall. People who are not in great health will pay more per year. Age is also a variable. 

Annual premiums are dependent on these two things as the main factors. People who are 30 years old and are non-smokers that are in excellent health will pay $500 annually for a 30-year plan. A 40-year-old will pay $850 on average if they are in excellent health for a 30-year plan. There are twenty-year plans available, as well as ten-year plans. The later in life an insurance policy covers a person and the lower their health, the more expensive the policy is in most cases.

When Should I Purchase A Life Insurance Plan?

In addition to financially taking care of loved ones, there are other reasons a person may purchase a life insurance policy. Some purchase policies so that they can donate the money to a nonprofit organization or because they are deemed valuable, naming the organization the beneficiary. In most cases, however, people are looking to ensure that their family can manage if the sudden loss of their income occurs. The more expenses a person has that fit into this category, the more likely they should purchase a policy. If your home has a mortgage that would be a struggle to pay with the loss of your income, choosing a life insurance plan could a smart plan. The same goes for debts that need to be paid off, expenses related to college, and other major costs. People who have a child with medical needs that will cost a lot of money over their lifetime should also look into a life insurance plan that will cover these expenses. Once you are aware of these types of expenses and know that finances could become a struggle without your income, you should start considering purchasing a life insurance policy.