A life policy protects the family’s finances at your death. Each type of policy offers different kinds of benefits, and each individual has different financial needs. Choosing the right policy to protect your family when you are gone can be confusing without knowing some facts. Therefore, these five things can help you know what to look for in a life insurance policy.
Types of Policies
A whole life policy will provide permanent insurance for your entire life. The savings will build up during the policy, which gives you options for borrowing from the policy’s cash value. Permanent coverage is an investment into your family’s future.
A basic term policy will only cover you for a certain number of years, and then, the policy will expire without any more benefits. However, the premium will be lower than the whole life premium. In addition, if you died during the covered time of the term policy, your beneficiaries will receive the value of the policy, and the benefits will be tax-free.
You can choose from a traditional whole life, universal whole life or a variable life policy. The whole life has a fixed premium with a guarantee of minimum growth. The universal plan offers the option of raising or lowering your premiums, which results in a cash balance. The variable policy allows you to choose how to invest the cash.
TPD insurance, (total and permanent disability), is generally included in most life-insurance policies however you should check with your provider to see if TPD is included in your policy.
Amount of Coverage
Your expenses now and in the future determine the amount of coverage you need. Make a list of your expenses such as mortgage, healthcare, utilities, college, retirement and other future debts. You can use this list to estimate an amount that will be needed at your death for the current and future obligations.
Life Insurance provides Security
A life policy will provide the surviving family members with a more secure financial future. Therefore, it is never too early to start preparing for the future. You will need to choose a policy early to make sure that your loved ones are cared for financially. No matter whether you are single or married, you still need insurance to cover your debts. In addition, the premiums will be cheaper to obtain coverage when are young.
Personal Life Coverage
Many people rely on coverage from their employers. This is a mistake since your job could end before your death. A personal policy should be obtained from a company to ensure that you are covered at all times. In addition, group employee coverage can be more expensive than a personal individual policy. Group policies are higher since the policies insure individuals who are health risks. An individual policy will consider your personal physical health for the premium quote.
Improve Your Lifestyle to Lower Premiums
Your lifestyle can determine the cost of your policy. When you make positive changes to your lifestyle, your health will improve, which will lower your premium. Tobacco use, obesity, high blood pressure and other health issues can cause you to pay higher premiums. After making improvements to these conditions, you can reapply to receive a better premium.
You can take control of your family’s financial future by obtaining the right policy with the right amount of coverage. Personal financial planning is critical if you want to make sure that your income is replaced at your death.
-Written by Craig Cutcliffe.