Table of Contents
- Where’s Your Money Coming from to Live?
- What is this Life Insurance?
- Who are your Beneficiaries?
- Joint- or Separate Life Insurance Policies?
Having any insurance can alleviate a lot of anxiety about having significant expenses when you’re in a car accident. You’ve got substantial medical treatments ahead, or the breadwinner has died.
Where’s Your Money Coming from to Live?
It can be devastating when the breadwinner dies, and there is a young family who has been depending on the breadwinner for a roof over their head, food on the table, medical care, and an education. Without life insurance, if the family weren’t super-rich, there is no way they can face life with all its expenses and no income.
Who is Relying on You Financially?
If you’re not sure whether life insurance applies to your life, you have to ask yourself the question, ‘who is relying on me financially?. Most times its children right up to the age of about 25 if they’re studying, it could be your partner or your parents too.
You may even be single with not an individual dependent, so you don’t have anyone relying on you financially. You don’t need life insurance unless, of course, your parents are still alive.
If you or your parents don’t have a lot of money between you, a life insurance policy can be a wise move. You don’t want your untimely death causing them even more stress than what they are already experiencing at your loss.
They may not be able to manage a funeral for you, but with a family life insurance policy, you can ensure that it will pay for your funeral costs.
Some aspects to think about with family life insurance –
- You and your spouse’s age?
- The number of kids you have and their ages
- What each person contributes to the running of the home and family
- Your employment status and how secure your jobs are
It is essential to calculate your family’s needs so that you can find a policy that will ensure your family can go forward with financial stability when you’re not there to provide anymore.
What is this Life Insurance?
Life insurance is a non-taxable sum of money that a family receives at the death of the breadwinner. This life insurance is much the same as other insurances – you also pay a premium to the provider who then ensures you have the amount of cover you agreed on. If you are the insured, when you die, your family or the named beneficiaries of the plan will receive said amount.
The amount you pay for this family life insurance plan will depend on certain factors – how long you want the cover for, your age and your health at the time the policy is underwritten. The underwriters then decide what premium you’ll pay based on the particular information you provided them with.
The higher the risk of you dying soon, the higher the premium is likely to be.
Calculate the Life Insurance you Need
The whole purpose of life insurance is to protect your family when you are no longer around. The payout or death benefit will be paid to your beneficiaries when you die, and they can use it as they need. You will, therefore, need to calculate how much life insurance you need so that your family can continue to live the kind of life they’ve grown accustomed to.
You have to think up all the debt you have, what you spend on groceries each month, what your electricity bill amounts to each month, medical bills, funeral expenses, childcare, and education as well as the outstanding bond amount on your home.
You’ll sometimes see when you’re researching life insurance companies that you can make use of an online life insurance calculator. These calculators can be quite helpful as they help you figure out how much life insurance you’re more or less going to need.
The calculator will analyze your situation and provide you with an amount to be guided by. Then it’s a case of contacting an agent and discussing the life insurance product you’re interested in.
Missing a Life Insurance Premium
Your insurer will notify you quickly when you have missed a premium. Most times, your cover won’t be canceled immediately, but you will have to get your premiums up to date within a ‘grace period.’ If you don’t pay within the grace period, your bonus and your entire life insurance policy will be canceled.
Life Insurance isn’t the same as Medical Insurance.
There are lots of different insurances, and each one serves a different purpose. Life insurance pays out a death benefit in the case of your premature death. It replaces lost income for the future.
Dread disease, for instance, will also pay out a sum of money when you can no longer work, but it isn’t the same as life insurance. People badly need both types of protection, more so when they have dependents.
Life insurance companies allow you to buy both life insurance, dread disease cover, or disability cover online in the scope of a few minutes. The agents will help you structure your life insurance so that it suits the season of life you’re in.
Who are your Beneficiaries?
A beneficiary is the one who is going to get the payout of your life insurance policy when you die. You need to be careful who you name as a beneficiary – it needs to be those who will suffer the most financially when you as the breadwinner dies. It could be just one person, and it could be a group.
There is also a contingent beneficiary. It is when the person to receive the death benefit cannot. A typical example is when your spouse is a beneficiary, with your parents being contingent beneficiaries. Your parents would receive the death benefit if you and your spouse were to die at the same time.
There is quite a lot to family life insurance as you can see, and there are also lots of life insurance companies. You can either look for a quote online, or you can send them a message online, and the insurance agent will call you and make an appointment to discuss life insurance with you.
You don’t HAVE to have a Medical Examination.
Some life insurance companies will want you to have a medical examination, and you will also need to answer some questions before they consider your application. Other life insurance companies will only ask you a few questions.
Don’t let your current health stop you applying for life insurance. Of course, if you want life insurance but you don’t want a medical examination, there are these life insurance companies that don’t require the exam. Some life insurance companies that come as ‘guaranteed’ maybe for applicants between the ages of 50 and 80 years of age.
Insurers will Explain Term- and Whole Life Insurance.
It is essential, because what life insurance do you need? Term insurance is the more affordable option and is suitable for a certain period, while whole life insurance is more expensive and applies to your entire life while you’re paying the premiums.
With term life insurance, the death benefit can be paid out as a lump sum, a monthly payment, or an annuity. These term policies expire at the end of the term period, which can last up to 30 years. Entire life insurance has a death benefit but a cash value too. The premiums you pay each month or each year are partially used to fund the cash value.
There are fees involved, and it is because of these fees that a whole life insurance policy can cost much more than the term life policy. Whole life will continue while you pay the premiums. People looking for simplicity tend to steer clear of entire life because the cash value component makes things a bit more complicated because you have to take into account the fees and taxes.
Whole life doesn’t end there – there are different variations of full life insurance – universal life insurance and variable life insurance. They are entire policies with returns that aren’t guaranteed. The investment funds for these policies are linked to mutual-fund investments.
Universal life insurance, for instance, is like whole life insurance but with one or two different features. Unsteady life insurance is a permanent life insurance plan that also has an investment component with its cash value account invested in sub-accounts.
These sub-accounts are only available within a variable life insurance policy with several sub-accounts to choose from. The cash value account can grow, and the appeal to this variable life insurance lies in the investment part as well as the excellent tax treatment of the policy’s cash value growth.
Each Life Insurance Policy has its Pros and Cons.
The truth is that no particular life insurance is better than the other. Both types of life insurance plans have their pros and cons and may suit one family but not the other. That is why it is essential to speak to a professional insurance agent who is 100% clued up on the different kinds of policies there are. Whichever one you opt for, you want to be sure that there is enough coverage to meet the needs of your surviving family members.
Joint- or Separate Life Insurance Policies?
When you get married, it is a good idea to consider life insurance for your spouse. It is essential, more so if you’re considering having kids or you’ve already got. You can buy a separate policy or a joint one. With a different system, you’ll each pay distinct premiums, and you can even select your beneficiaries. A benefit is that your spouse’s age or health won’t influence your policy.
With a joint policy, you’re both covered, and you can choose whether you want to buy a term- or permanent policy. There are two parts to this joint policy – a first-to-die policy where the death benefit pays out when then the first policyholder dies.
The other policy is second-to-die, which is also referred to as the survivorship life insurance policy. It doesn’t pay out until both policyholders have died. The death benefit is paid to their listed beneficiaries.
Of course, there could be quite a long period between the time that the first policyholder dies and the second policyholder, so it could mean the death benefit taking longer to payout. The policyholder that is still alive has to continue paying premiums.
You can also consider a life insurance policy for your kids. Child life insurance policies are much the same as the whole life insurance policy that you could buy for yourself. The plan has an investment part that builds up a cash value, which is an attractive aspect as it can be helping towards saving for your child’s future.
Add-Ons to Life Insurance
Some people take their family responsibilities very seriously, and they look for further financial security for their families, along with family life insurance. They look at things such as critical illness cover, which is an additional type of protection to add to your life insurance policy. It can give you a pay-out if you are diagnosed with a critical illness during your policy period.
Make Sure You’re Clued Up
Life insurance needs careful consideration. Your tomorrows aren’t guaranteed and, even if you’re a young parent in your 20s or 30s, your kids can wake up one morning, and you’re no longer there. Don’t delay – speak to an insurance adviser as soon as possible after researching the different types of life insurance policies there are for families.
A reputable, reliable adviser will assess your needs and recommend life insurance policies that are tailored to what you can afford and what your family needs. From today you can have peace of mind that your young family won’t be split apart because there’s no money to pay for their necessities.
Taking out a life insurance policy can provide you with a sense of security that your loved one will be financially protected when life takes an unexpected, unpredictable turn.