What Everyone Should Know About Life Insurance
Insurance is often confusing for people because it is a very complex topic and there is a lot of information available on the subject. The purpose of insurance is to provide a safety net when disaster strikes to replace something that has been lost. The purpose of life insurance is to provide a financial benefit to the policy beneficiary when someone dies.
It is important for families with children to have coverage in case one or both parents die. The money can be used to replace the deceased spouse’s income, pay for the children’s college education, pay off debts, and pay for funeral expenses. Coverage for children is a good idea because it is inexpensive and can be used to cover the cost of final expenses.
There are two main types of life insurance available: term life and whole life. A term life policy provides coverage for a specified number of years ranging from 1 year up to 30 years. A whole life policy provides coverage that never expires.
Term life’s main advantage is that it costs less than whole life. The disadvantage is if the person lives longer than the coverage period there will be no payout upon death. Whole life does cost more, but there is a guaranteed payment upon death, no matter how long the covered person lives. Some whole life policies offer investment options that help to lower the cost of coverage.
Some policies offer an accelerated death benefit. This allows a person who has been diagnosed with a terminal illness the ability to take some of the death benefit before they die to pay for medical bills or any other expenses. The downside is that any money taken utilizing the accelerated death benefit reduces the amount the policies beneficiaries will receive upon death.
Having insurance is important because it provides peace of mind and helps one’s heirs during a difficult time. Everyone’s situation in life is different. Knowing all of the options available will help the consumer make the best choice in coverage.