The flip side of that conversation, though?
Still, its important to prepare yourself and your family for the (un)expected.
Part of that preparation may include working withlife insurance.
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But what does life insurance cover?
Were going to review the basics so you might determine if its right for you.
What Is Life Insurance?
Life insurance is a contract between an insurer and a policyholder.
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In laymans terms?
Life insurance helps support your family after you die.
Its a financial cushion your family can turn to after the loss of your salary or income.
However, if you have several dependents and are the family breadwinner, youll want to seriously consider it.
Did you know?
Youll want to shop around.
you could get quotes online pretty easily, ensuring you find the best policy for you and your family.
Types of Life Insurance
The two primary types of life insurance are term and permanent.
Whole life falls under the umbrella of permanent life insurance policies, which well expand later in the article.
Term Life Insurance
The simplest form of life insurance isterm life insurance.
Theres one major difference between them.
Its also the most common life insurance policy offered.
Permanent Life Insurance
Unlike term life, permanent life insurance pays a death benefit at any age.
Here are the major types of permanent life insurance policies.
Also known as ordinary life, traditionalwhole life insuranceis the most common form of permanent life insurance.
It provides a death benefit and a savings account.
Your premiums stay the same throughout the policy, and you receive a specified death benefit.
The savings portion grows based on the company-paid dividends.
Also known as adjustable life,universal life insuranceoffers more flexibility than whole life.
If you pass a medical exam, you may be able to increase the death benefit.
Once youve accumulated funds in that account, youll have the option to change your premium payments if needed.
Universal life premiums are usually less expensive than whole life premiums but more expensive than term life premiums.
However, if your investments dont do well, you could lose money.
Having said that, some policies wont let the death benefit fall below a certain amount.
Youll get the features of both variable and universal life policies with this one.
Married couples have the option to purchase an individual or a joint life insurance policy.
The latter covers both spouses.
Survivorship life insurance, also known as a second-to-die life, is a joint life policy.
It doesnt pay out the death benefit until after the second insured partner dies.
Because of this, its sometimes easier to qualify for a policy, too.
This insurance covers key employees, such as a business owner.
Key man insurance is life and disability insurance rolled into one.
Groups and employers offer group life insurance to their members and workers.
Unlike other life insurance policies, coverage is guaranteed and there are no health questions.
(The premium is based on the group as a whole.)
Group insurance is typically offered as part of an employees benefits package.
AD&D shouldnt be considered a replacement for life or disability insurance.
Because of its specificity, it might not be worth purchasing for most people.
Final expense life insurance is generally a lower-value policy that beneficiaries can put toward your final wishes.
A reminder: you’ve got the option to useanylife insurance policy to pay for funeral costs.
Frequently Asked Questions About Life Insurance
Life insurance is a complex topic.
So, weve rounded up some popular questions people have regarding these policies.
Do I Need a Medical Exam to Qualify for Life Insurance?
Its possible to get a life insurance policy without undergoing a physical.
Regardless, answer survey responses honestly, or a company could void your policy.
Whats the Qualifying Exam Like?
A health care professional, such as a nurse, typically does them.
The exam usually consists of a verbal questionnaire and a blood and urine sample.
you could do it in your home, too.
What Types of Death Are Covered?
After the two-year window, the policy will usually pay out for suicide unless theres another provision in place.
That said, each policy is different.
Some may have recreational-drug or alcohol-related death clauses, for example.
People in certain occupations might not be covered, either.
Your best bet is to thoroughly review a potential policy and consult with a professional if needed.
What Happens if You Outlive Your Policy?
How Does a Life Insurance Payout Work After the Policy Owner Dies?
Typically, thats within 30 days.
It sounds appealing right?
Check it out here!
