(Newswire.net — March 1, 2021) — By the time you’ve been an adult for a while, you probably have a few kinds of insurance. Maybe you have health insurance, either privately or through an employer. You may even have renter’s insurance or homeowner’s insurance, depending on whether you’ve bought a home yet. One type of insurance policy that is often underestimated, though, is life insurance. Even if you are responsible for your finances, you may not have purchased a life insurance policy. After all, who wants to think about mortality? No one, that’s who.
Nonetheless, we will all die one day, and if we have people who depend on us for financial security, a life insurance policy is necessary. That doesn’t mean every person needs as much life insurance as the next person. There are plenty of options for life insurance out there, and getting life insurance quotes from several insurance companies is important before signing on to pay premiums. So, with that in mind, here are three things you should know about life insurance.
1. How does life insurance protect your loved ones?
The answer to this is pretty simple when you think about it. A life insurance policy is like a savings account that you pay into, by way of premiums, each month. The insurance company keeps that money safe until your passing. Then, the people you’ve designated as your beneficiaries will receive what’s known as a death benefit—an amount of money that corresponds with the amount of coverage you’ve designated when you signed the type of policy you initially chose.
Most people designate their spouse and kids as beneficiaries, and the death benefit serves as a way to guarantee that these loved ones will be provided for in the case of your untimely passing. If your annual income is a major source of income for your family, the best way to guarantee their financial wellbeing is to get a life insurance quote sooner rather than later.
2. How much is a life insurance premium?
That depends. Different life insurance companies will offer different premiums, of course. Still, it also depends on the type of insurance policy you opt for, your medical history, your credit score, and the amount of coverage you choose. There’s no one answer to this question, but getting a few life insurance quotes from some different life insurance companies will give you more information.
If you’re nervous about premiums, it’s a good idea to think about how to manage your money during a pandemic and even after COVID-19 is a thing of the past. If you take stock of your financial situation and manage to put some money in a savings account or an emergency fund, that will give you far more peace of mind. Financial stress is a horrible burden, so it’s a good idea to budget for what really matters—whether that’s an emergency fund or a life insurance policy.
3. Are there different kinds of life insurance to choose from?
There sure are! There are two main types of life insurance you’ll be looking at when you contact a life insurance company. The first is called term life insurance. Term life insurance is kind of what it sounds like—the insurance company commits to pay your beneficiaries a death benefit for as long as the term of your insurance policy lasts. After the term is up, the policyholder can either renew or cancel the policy, but the premium will be recalculated according to the policyholder’s updated medical history and age.
The second type of life insurance is permanent life insurance or whole life/universal life insurance. These are insurance policies that do not run out—the beneficiaries get the death benefit whenever you pass on. They also have a savings account component that term life policies typically do not have, but their premiums are usually higher.
Of course, you don’t want to be thinking about what might happen to your family members upon your passing, especially if you’re young and in good health. Unfortunately, these are uncertain times, and you need to make sure that the ones you love are cared for. Taking out a life insurance policy is the best way to make sure that they’ll have a paycheck, even if the worst happens.