September is Life Insurance Awareness Month so now is a great time to consider this extra level of protection for your loved ones. Depending on factors such as age and health status, life insurance can be relatively inexpensive (especially considering the staggering cost that could be incurred by your family in the event of your passing if you don’t have life insurance).
To help you understand the basics of life insurance, here is some basic information:
What is Life Insurance? At its core, it is a contract between you and an insurance company where you give them money, and if you were to die, they would give the set amount of money to whomever you choose.
The Benefit of Life Insurance: The most important benefit is that you won’t leave your loved ones with a bunch of debt and expenses. Think about it. Not only would they have to grieve your death, they would also have to figure out how they are going to pay for everything (funeral, mortgage, medical expenses, etc.).
What Are Your Life Insurance Options? There are three types of life insurance – term, whole and universal.
Term Life Insurance: This option is geared toward younger people because it is more of a temporary plan that only covers you for a period of time, usually 10, 20 or 30 years. If you were to stop living within the specificed timeframe, a set amount of money would go to the people or person you choose.
Whole Life Insurance: It has the same concept as term, but this policy is forever (or until you die). It also has a bell and whistle.
The bell: It has a savings account that accures money. Eventually (if you continue to not die), it will hit the policy’s coverage amount. At that point, the insurer will say something like: “You have the same amount of cash in your savings as what we would pay out, so you don’t need us anymore. Here is your money.”
The whistle: Whatever cash you accrue, you can borrow, but to no surprise, you’ll eventually have to pay it back to continue coverage.
Universal Life Insurance: It’s a lot like whole life insurance but with a shinier bell and two whistles.
Shinier bell: Instead of a standard savings account, this also accures interest.
Whistle 1: You can kick in more money than your payment to take advantage of interest.
Whistle 2: Not only can you borrow from this account, you can also skip payments without a penalty (as long as the account has money in it).
How Much Does Life Insurance Cost? It depends on the coverage and a number of other factors like age, occupation and even hobbies. So a 5K-running fitness blogger might only pay $15 a month, whereas chain-smoker with a family history of heart disease could pay well over $1,000 a month. Bascially, the younger and healthier you are, the cheaper it is.
For more information about life insurance and to get a quote, contact your insurance agent today. It could make all the difference to your family during a most difficult time.
Be prepared. Be safe!