Death is an inescapable ending to the play called life. No matter how careful you are from day to day, it will still come for you. There’s no telling when or where. The best you can do is to delay it by living a healthy life, or better yet, make sure you’re ready for it. When you prepare for your own passing, you take on a realistic mindset and accept the inevitable. You also see to the future needs of your family, which is possible with life insurance provided from Kim Wilhelm of FinalExpenseDirect.
Although the trend of applying for life insurance has gone down these past few years, that should not deter you from looking for one. It’s one of the easiest ways to slowly but surely help your loved ones get through financial hardships once you’re gone.
Reasons To Get Life Insurance
When you purchase life insurance, you’re essentially making a contract between you and a company. They agree to provide your named beneficiaries with a certain sum of money at the time of your passing, but in return, you have to pay them a premium. This is either a monthly or yearly payment, and the amount is set based on multiple factors such as lifestyle and current age. Here’s why it’s highly recommended to acquire life insurance:
- You can have peace of mind knowing that should you meet an untimely demise, your loved ones will be financially protected.
- No one knows when they’ll die. If it happens to them the next day, their family could be left with little or no money at all. This is especially true if they’re the breadwinner. With life insurance, you don't have to worry about your family dealing with such situations.
- Permanent life insurance is a form of investment since part of your premiums accumulate cash value, which is essentially savings. You can use that money to pay debts, loans, or medical bills while you’re still alive.
- Depending on where you live, there are tax breaks for life insurance benefits.
Tips to Choose The Right Life Insurance
There are a number of private institutions selling life insurance, so you need to look for a policy that suits your and your family’s unique needs. If you’re now convinced that life insurance is a must-have, check the following tips to get the best option on the market:
1. Understand Term And Whole Life Insurance
The first mistake some people make is assuming that term and whole life insurance are the same.
The cheapest type of life insurance is term life insurance since it only covers a certain time frame. However, unlike whole life insurance, this does not provide policy holders with a cash-out within their lifetime.
This is the type of life insurance you choose to ensure a payout to your beneficiaries in case of your death. Many individuals who often do dangerous stunts or activities opt for term life insurance to protect their loved ones should a fatal accident occur. Remember that once the term expires, so does your coverage.
Permanent life insurance, on the other hand, is more costly since it covers your entire life. It means you’re still insured even when you get older or lose your safety net.
Unlike term life insurance, whole life insurance allows you to grow your cash value over time. Aside from paying the policy insurance, you're also putting aside an amount for the policy's cash value. Of course, this is part of your premium and not a separate payment.
Moreover, since you're investing and at the same time paying for your insurance, you can use your cash value in the future. For instance, you can use it to fund your policy premiums, withdraw some of it for your retirement, or take out a loan. You may need to check with your policy provider as doing any of those may come with additional fees, conditions, and terms.
If you’re on a tight budget, the best insurance for you and your family is term-based. Since it’s the cheapest type of life insurance, you can get benefits without draining your bank account. However, keep in mind that it doesn’t build any cash value over time.
The coverage period for term life insurance can be anywhere from a year to 30 years. When the term is over, you have the option to renew your policy. However, you must understand that when you go with the same insurance, recalculation will take place since premiums are based on your health, age, and lifestyle. They will increase as you get older and your health deteriorates.
The premium for a permanent life insurance policy is based on your circumstances on the day you applied. Hence, the earlier you get a policy, the lower the premium tends to be. There’s no reapplying or reassessment to be done since term periods aren’t involved. Though more expensive at the onset, permanent life insurance is more cost-efficient than term life insurance in the long run.
3. Know The Length Of Coverage You Need
Before applying for a certain type of life insurance, determine how long you need coverage. If you simply want to make sure you leave your family something while you have a mortgage, then term life insurance it is. You can use term life insurance for personal or security loans, or your beneficiaries can use it to cover their expenses when you’re gone.
However, if you want to be set for life, then permanent coverage may be right for you.
4. Choose A Reputable Company
The first thing that usually comes to mind when people think of applying for insurance is the range of large insurance companies out there. Many individuals lean toward insurance providers with solid reputations since they can rest assured they’ll get their money’s worth. There’s also a low chance that those companies will go bankrupt or die out anytime soon.
However, that doesn’t mean you’re limited to getting insurance from well-known providers. An alternative is to search for life insurance companies offering mutual life insurance. They make policyowners the shareholders of their entity. This allows you to receive part of the company’s profits regardless if you’ve purchased a term or whole life insurance policy.
The best thing you can do for your family is to apply for life insurance as early as now. Although it may not be easy to set aside money for it, it would be even more difficult for your loved ones to deal with the financial consequences of your passing if you don’t have a policy. But be careful when it comes to choosing insurance providers since not all of them will look out for your best interests. Do your research, weigh your options, and base your final decision on all the information you’ve gathered.