Simply speaking life insurance is a way to provide financial security for ones family should the policyholder - (person insured) die.
A life insurance policy is a legally binding contract between the insurance company (the insurer) and the living person(s), or entity(s) being insured (the insured). A death benefit is an agreed upon sum of money which will be paid to the policy owner from the insurance company when the insured person dies. To ensure (pun intended) that this death benefit is paid out following the death of the Insured person, this person agrees to make regularly scheduled payments to the insurance company in order for the policy or contract to remain in force/ or legally binding.
Why do people get life insurance in the first place?
Often people get life insurance because they understand the necessity of providing a means for their family to be able to maintain a level of financial comfort in the unfortunate event of their untimely passing, equal to or greater than what they were able to provide while still living.
This financial security can take on many forms. For instance if you want to make sure the mortgage is paid in full, so your family can own their home. You may want to be able to put your children through college, have a steady income for daily bills, or have all of the above covered.
At Insured.care we believe that no matter what's decided upon, acquiring life insurance should be an effortless, and inexpensive process tailored to your needs.
Do I need life insurance?
There is one definitive prerequisite which determines your need for life insurance. That is, if you being deceased would cause financial strain for anyone. If this is the case, then yes you need life insurance.
These are the top reasons you may need life insurance.
1. You want to replace income for dependents.
Dependents would include but not be limited to children, a spouse, siblings, parents, and grandparents. As a loving parent when you promise your children you'll protect them no matter what, life insurance is key to ensuring this beyond death.
2. Take care of final expenses.
Funeral and burial costs can be covered with life insurance. Estate admin costs, debts, and medical expenses not covered by health insurance.
3. Create an immediate estate/ inheritance for your heirs.
In addition to or while having nothing else to offer your heirs, you can create an inheritance for loved ones by listing them as beneficiaries of a policy after purchasing life insurance. This money can be given directly to the beneficiary(s), bypassing the often complicated process of probate. Probate - the judicial process whereby a will is “proved” in a court of law and accepted as a valid document which is taken as the true and final testament of the deceased, whereby an estate is settled.
4. The life insurance you have through your job isn’t enough.
9 times out of 10 work provided life Insurance isn’t enough. The reason being, sure you might be able to have a funeral and be buried adequately, but if you wanted to cover anything else on this list it simply won’t cut it. Group life insurance through your employer is often capped at 1 to 2 times your annual salary. This is in contrast to the recommended amount by financial experts of 10 to 15 times your annual salary.
5. You run your own business.
For small business owners life insurance is also essential. In cases where business debt was created by leveraging personal assets like a home, insurance proceeds can be used to cancel said debt so that family won’t have to take on the responsibility of paying back creditors. A buy sell agreement can be funded as well. This agreement is a contract used to divide up a deceased partner’s share(s) of a business or firm, with the aid of a knowledgeable attorney. If a business partner is named the beneficiary the payout can be used to help your partner buy out your share from your heirs at a predetermined figure. This will simultaneously help keep the business and business partner(s) afloat with you out of the picture, and provide income to your heirs from the business, or the sale of your share.
What if none of the above reasons reflect your circumstances?
If the above listed reasons for needing life insurance does not relate to your current situation, you probably don't need the protection at the moment. At Insured.care however we do endorse re-examining your need for life insurance, as significant life events occur. For instance if you were to take on financial debt for any reason in the future. Do remember also that the earlier in age you are when you insure your life, (as the policy owner) and your loved ones as beneficiaries the lower your price will be.
In Summary
Life insurance is a convenient and inexpensive way to ensure your family is taken care of when you're gone. It works just like any other subscription model one could think of. For instance, if you want the ability to watch your favorite shows on demand you can pay a fee ranging from $6.99 - $19.99 a month to Netflix. On-demand content will be provided for you and your family, resulting in endless hours of entertainment. Likewise a monthly fee depending on your age, health, gender, and how much money you want to leave your family will be paid to a life insurance provider. Instead of entertainment for the family, in your personal movie financial security is the end result.
Please reach us at info@insured.care if you cannot find an answer to your question.
Term life insurance is a type of life insurance that provides coverage for a specified period of time, known as the term. It is designed to provide financial protection to the policyholder's beneficiaries in the event of their death during the term of the policy. If the policyholder dies within the specified term, the beneficiaries will receive a death benefit payout. However, if the policyholder survives the term, the coverage ends and no benefits are paid out. Term life insurance is generally more affordable than permanent life insurance policies, but it does not build cash value or offer lifelong coverage.
The length of term insurance that is right for you depends on your specific needs and goals. Here are a few factors to consider:
1. Financial obligations: Consider the length of time you have committed to invest in your financial obligations, such as a mortgage or supporting dependents. You may want a term that aligns with these obligations, such as a 20-year term if you have 20 years left on your mortgage.
2. Income replacement: If you want to provide income replacement for your dependents in the event of your passing, consider a term that covers the years until your dependents become financially independent, such as until they finish college or reach a certain age.
3. Budget: Longer-term policies generally have higher premiums. Consider your budget and how much you can afford to pay for insurance coverage. Shorter terms may be more affordable but may not provide coverage for as long.
4. Future needs: Consider any future needs you may have, such as planning for retirement or leaving a legacy. If you anticipate needing coverage beyond a certain term, you may want to consider a permanent life insurance policy.
Ultimately, it's important to evaluate your specific situation and speak with a licensed insurance professional who can help determine the length of term insurance that best suits your needs.
A term life insurance policy covers most deaths resulting from accidental and natural causes. There is a two-year contestability period in cases of suicide. This means a policy won’t pay if there is a suicide within the first two years - all premiums paid will be returned to the beneficiary.
Situations involving fraud and material misrepresentation will be investigated by the carrier and may be denied. All claims are reviewed and if needed, investigated, by the carrier that issued the policy.
The death benefit can be used by the beneficiaries to cover various expenses, such as funeral costs, outstanding debts, mortgage payments, or to provide financial support for dependents.
Unlike permanent life insurance policies, term life insurance does not accumulate cash value over time. It is generally more affordable and straightforward, focusing solely on providing a death benefit during the specified term.
It is important to note that term life insurance does not provide coverage for the entire lifetime of the insured, and the policy will expire at the end of the term unless it is renewed or converted into a permanent policy, if available.
Determining whether your life insurance through work is enough depends on various factors, such as your financial obligations and goals. Here are a few points to consider:
1. Coverage amount: Evaluate the coverage amount provided by your employer. Is it sufficient to cover your outstanding debts, such as a mortgage, loans, or credit card balances? Additionally, consider whether it would adequately support your family's ongoing expenses, such as housing, education, and daily living costs.
2. Dependents: If you have dependents, such as a spouse, children, or aging parents, it's essential to assess whether the coverage amount would adequately support them if something were to happen to you. Consider their future financial needs and whether the policy would provide ample support.
3. Portability: One drawback of relying solely on employer-provided life insurance is that coverage usually ends when you leave the company. If you change jobs or retire, you might lose your life insurance coverage. It's important to evaluate whether your policy can be converted into a portable individual policy or if you can secure coverage elsewhere.
4. Additional coverage: If the coverage through your employer is insufficient, you might consider supplementing it with an individual life insurance policy. This will ensure that you have enough coverage to meet your specific needs and financial goals.
5. Cost: Assess the cost of obtaining additional coverage independently. Though employer-provided coverage is often more affordable, it's important to evaluate whether the price of individual coverage is reasonable given your requirements.
It is generally recommended to consider life insurance when you have dependents or financial obligations, such as a mortgage or outstanding debts. Additionally, obtaining life insurance at a younger age may result in lower premiums. It would be best to lock in lower premiums now, because the price will only grow higher further out as time passes.