Your Basic Guide to Life Insurance
There’s a common misconception that life insurance is only something older people need. If you’re young and healthy, why should you start planning for your death? However, there are multiple reasons why investing in life insurance when you are young (or at any age) can help you. Learn about the basics of this coverage type and how to choose options that meet your needs.
Life insurance premiums are based on risk.
Like other forms of insurance, the life insurance quotes you receive will be based on a variety of risk factors. When shopping for coverage, you will likely speak with a representative of the life insurance company during the application process to answer their questions before they can give you a quote estimate. The “riskier” you are to cover, the higher your premiums will likely be.
There are multiple factors that contribute to the cost of life insurance coverage. Your age, whether you are a tobacco user, your medical history, and even your gender can impact your coverage options. Interestingly, this is one of the best reasons to invest in life insurance when you are young. Younger people often get the best rates because they are considered low-risk. It’s unlikely that a company will have to issue a payout in the near future.
Life insurance covers your end-of-life expenses.
Life insurance isn’t necessarily something for you to use. Instead, the payments are issued to your beneficiaries or loved ones who you want to care for after you pass away. The life insurance company will issue a check for the lump sum of your death benefits. Your family can use the funds to cover your funeral costs and pay off any medical bills or final expenses you may have.
Depending on the amount of coverage you have, your family members might be able to live off your insurance for a few months after you pass away. This can give them peace of mind as they cope with your loss and take steps to rebuild their lives.
If you have kids or a family to take care of, consider how much coverage you need so they are cared for after you pass away. Even extending the length of time they are cared for by a few months can make a big difference to your beneficiaries.
There are multiple kinds of life insurance.
As you meet with multiple insurers to discuss your options, keep in mind that there are multiple types of life insurance on the market. Term life insurance typically lasts for a set period of time, like 20 to 30 years. When the term runs out, you can extend the coverage with your current provider. That being said, you may need to have a medical exam before you can do so. This has to do with your risk factors.
For example, let’s say a healthy 25-year old takes out a 30-year term life policy. It will expire when they turn 55. The insurance provider will request a medical exam to ensure they are still healthy even as they age. Once your term ends, you will receive a new life insurance quote for the coverage your insurer is willing to offer.
There are other life insurance policies that last your entire life. You do not need to renew permanent life insurance. Not all insurers offer this type of coverage. Ask your life insurance company what options they have for term life insurance and long-term protection.
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Take time to learn about the different life insurance policies you can choose. Talk to local insurers about their premiums and death benefits. Doing your research can help you find the right coverage for your needs.