What is Life Insurance?
A Life Insurance policyholder ensures that a designated beneficiary will receive a certain set amount of money from the insurance company upon the policyholder’s death. Life Insurance comes in three major variations:
Life Insurance Variations
- Term Life Insurance: Insurance is purchased by a term of five, ten, twenty, or even thirty years. If the policyholder passes away within the designated term limit, the designated beneficiary will receive the funds. If the policyholder is still living at the end of the term limit, the money is taken.
- Whole Life Insurance: Insurance is purchased and accumulates so that the policyholder has the ability to borrow on it, if necessary. It has cash value.
- Universal Life Insurance: This policy type is similar to whole life insurance, but affords greater flexibility in terms of what the money can be taken for based on certain needs.
How Much Life Insurance is Advisable?
The amount of life insurance a person should purchase is very individualized based on the following factors:
- Family Size (including dependent step children and dependent disabled adults)
- Financial Responsibilities (including mortgages, college loans, and other large payments)
Discussing individual circumstances with a skilled, knowledgeable agent can ensure that you purchase the necessary amount of life insurance for your circumstances.
Misconceptions about Life Insurance
- The interference of pre-existing conditions: It is a misconception that life insurance is not purchasable by those who have health challenges or pre-existing conditions. Life insurance is available to everyone. The status of health only affects how much life insurance can be purchased and the cost of the policy. Healthier individuals may be eligible for more insurance at a lower cost, but insurance will not be withheld from anyone.
Necessity: It is a misconception that only a person who is accruing income is in the market for a life insurance policy. In truth, anyone who plans to have any sort of burial or funeral expense would benefit from a life insurance policy to assist loved ones posthumously.