Life insurance makes sure that your loved ones are financially protected if you pass away. It’s one of the best ways to make sure your end-of-life expenses are covered and your loved ones won’t have to pay expensive costs out-of-pocket.
What is Life Insurance?
There are few things as important as loved ones. Unfortunately, money sometimes gets in the way. Planning expenses, especially your costs and debts for when you pass away, is difficult.
Life insurance can make it a bit easier. Rather than counting on those you’ll leave behind, your will, etc., you can easily make small, monthly contributions to put towards those overhead costs. Without any bells or whistles, that’s what life insurance is — a plan to put money aside monthly for a payment when you pass away.
You get to choose who this payment is entrusted to. This money, called a death benefit, will be used by one or more beneficiaries. These beneficiaries should be trustworthy (often children, relatives, close friends), as they will be the ones to use the death benefit on your behalf.
You can use your life insurance policy for anything you want. Typically, this includes end-of-life expenses such as funeral planning, mortgages, estate planning, inheritance, charitable giving, medical bills, credit card debt, and more.
Life Insurance Policies
Though all life insurance policies function in this same basic way, there are different types for different people with their own specific needs and goals. One of the most well-known policies is whole life insurance.
Whole life is permanent — so, once you sign up, and as long as you keep up with your payments, you will be covered until you pass away. Once that happens, the insurer will issue your death benefit to your beneficiaries.
The death benefit for whole life ranges anywhere from $200,000 to more than $1 million. You must be fairly young and in good health in order to qualify for most policies. You can also earn money for yourself while still living through its cash value.
Cash value is accrued slowly and steadily with your whole life policy. A small portion of your premium is put towards savings and grows over time. You can access these funds for anything you want while living, but it will not be included with your death benefit.
A similar but more investment-focused policy is called universal life. These policies put more money towards things like stock indexes, with flexible premiums and more room to accrue cash value.
Term life insurance covers you for periods of 10 to 30 years. It does not accrue cash value, but is less expensive than whole life insurance, with death benefits typically between $100,000 to $500,000.
Final expense life insurance has smaller death benefits, anywhere from $2,000 to $50,000. You can purchase these plans much older and in poorer health, as old as 85+ with pre-existing conditions.
Is Life Insurance Worth it?
Life insurance is peace-of-mind. With it, you don’t have to worry about you or your loved ones being left without money for debts and expenses. Whether or not it is worth it is ultimately up to you.
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We want to make sure you have the help you need to make an informed decision on your insurance coverage. We want to get to know you and your needs. Call Affordacare Insurance today!