Questions To Ask When Getting Life Insurance
No person ever wants to have to think about what would happen to loved ones if they passed. Unfortunately, this inevitable event should be considered in any financial planning process. If you don’t take the time now to prepare, then your family will be the ones to pay for it down the line. Here are some things to consider when evaluating the various life insurance plans available to you.
What is the right amount of coverage for life insurance?
Getting too little coverage can leave family members in a lurch if you pass. Getting the right amount of coverage is very important in meeting the needs of your loved ones.
When evaluating the various plans available, consider the following:
• Funeral expenses
• Emergency needs
• Tax obligations
• Educational costs
• Outstanding debts
• Household expenses
What are the benefits of getting life insurance?
Life insurance is about protecting family members if one passes. The primary benefit is providing peace of mind to family members if a person passes. There are numerous benefits for getting life insurance. Here are additional benefits to life insurance:
• Family members can attend college
• Some policies permit borrowing
• Benefits are exempt from taxes in most cases for beneficiaries
• Spouse’s income can be replaced
What are the differences between the different types of plans available?
One of the most confusing aspects of identifying the right life insurance plan for your family needs is distinguishing between the options available. The three major options are whole life, term life and permanent life insurance.
Whole life insurance offer life insurance policies build tax-deferred cash value. This replaces the family’s income, final costs and educational needs. Loans with interest can be taken out against the policy. Any outstanding balance for a policy is deducted from the death benefit if the person passes. Premiums do not increase for the term of the policy.
Term life insurance is another form of insurance. This policy does not build cash value as it matures. Policies can be selected for 10-15-20-30 year terms. After a certain time, premiums increase annually until the policy ends. No medical exam is required to take advantage of this option. Your policy can be converted to a term life policy.
Permanent life insurance is another form of coverage. The value grows tax-deferred over time. Benefits are paid to beneficiaries. The cash-value continues to grow deferred. Dividends earned can be used to reduce premiums or can be applied to your death benefit.
Deciding to get life insurance is the first step to providing security to your loved ones if you pass. Learning which options make the most sense for you requires assessing your financial goals. Discussing the options available to you with an insurance representative is the best way to identify which policy will meet your family’s needs.
About the Author: Kandace Heller is a freelance writer in Orlando, Florida. She loves researching, writing and sharing what she learns with others. Information credit to the Calgary insurance brokers at Thomson Schindle Green Insurance & Financial Services Ltd.
Category: Life Insurance
