Life What you Need to Know about Life Insurance 09/21/20 While it’s often not easy to talk about, life insurance is something you should understand before you purchase a policy. Here are some answers to basic questions about life insurance to help get you started. What is life insurance? While auto insurance covers property damage and liability if you get in an accident, life insurance provides a cash benefit for your loved ones if something happens to you. What types of life insurance are there? There are two main types of life insurance: The first is term life insurance, which is designed to provide you with coverage for a select period of time (10, 15, 20, 25 or 30 years). Once this event occurs, a claim is paid out to the beneficiary in one lump sum. Term life insurance is generally cheaper than whole life and can be a temporary alternative or supplement to whole life insurance plans. The second is a policy that builds cash value as each premium is paid. Whole life and universal life are examples of this type of policy. Whole life insurance is designed to cover you for your entire life as long as you make the premium payments, barring any exclusions or exemptions. Which should you choose? It depends. Term life is usually enough for most families if they need life insurance. But whole life, universal life, and other types of coverage that build cash value could be more helpful in certain situations (such as paying estate taxes or funding a special needs trust). How are premiums determined? Life insurance premiums are based on the level of risk the insurance company takes by insuring someone. For instance, barring any type of accidental death, it would cost more to insure an older person who’s used tobacco for many years than someone who’s young with no history of tobacco use. Do life insurance policies have exclusions or exceptions? Yes. Life insurance policies do include exclusions and exceptions, similar to an auto or homeowners insurance policy. The most common are a suicide clause or exemptions due to dangerous activity. Life insurance is a way to help provide financial support for your family after you’re gone. The grieving process your family will experience will be difficult enough without having to worry if they can survive financially without you. It’s a big reason why life insurance is so important. If you need life insurance, don’t put your family’s financial future in jeopardy another minute. Contact your local Alfa® agent today.
Life Things to know about Life Insurance and Tobacco Use Things to know about Life Insurance and Tobacco Use