Insurance provides peace of mind. Peace of mind that the damages on your car are paid for in case of an accident. Peace of mind that your medical expenses are paid for if you are sick or injured. Life insurance also provides peace of mind, but in a much different sense. Life insurance gives you peace of mind for your family and their needs incase you were to pass away tomorrow or sooner than you may have hoped for.
If you are the primary provider for your family, your family’s security is of the utmost importance.
We’ve discussed before how life insurance can help you, and how your policy can provide for your family’s financial needs in the case of a tragedy or untimely death. However we haven’t discussed a very essential question, how does life insurance work? Below we have some details on some health insurance policies and benefits in case you are still not clear on its intricacies and complexities.
Term Life insurance is often referred to as pure life insurance. In pure life insurance payout only occurs when the named person dies within a defined term. However if the person does not die in the defined period, no portion of the premiums will be returned to the policyholder. According to Duke’s Personal Finance site, fortunately most of these life insurance policies are renewable and convertible.
Unlike term life insurance, whole life insurance does not have a predefined term, but instead provides benefits for the policyholder for his or her entire life. Premiums are paid until the day the policyholder dies, making it much less risky than term life insurance. It also contains a financial component to it, since it accumulates cash value that can be withdrawn over time.
Much like whole life insurance, universal life insurance has a cash value component to it that can be very helpful. However unlike the latter’s benefits, universal life insurance cash value is determined by short-term interest rates. Premium payments in excess of the cost of the life insurance plan are added to an interest-bearing account. Best of all, despite constant interest rate fluctuation, interest rates are never allowed to fall below the policyholder’s guaranteed interest rate.
Accelerated or Accidental Death Benefits
These clauses in your life insurance plan will ensure that your family receives financial assistance and compensation in case the policyholder falls ill with a specific illness or is killed in an accident. Accidental Death Benefits often give an additional payout, including double the original payout in the event of a tragedy. Accelerated Death Benefits on the other hand allow for you to withdraw portions from your policy in order to pay for treatments or other medical expenses. These policies and terms are great to have if you have a family history of illness, or if your job possibly puts you in harm’s way.
Form a great relationship with your agent when choosing insurance. You will be the judge of whether your agent has your best interests in mind. Your agent must offer you a variety of different options according to your needs and financial capabilities. The personal finance site Everplans suggests evaluating your agent in three steps. These are: (1) Proper Licensing (2) Experience (3) Additional Certifications and Credentials.
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