No one knows tomorrow; anyone can die anytime but what happens to those left behind? Do you plan to leave them without any sort of insurance for their future?
When the breadwinner of a family dies, the children are sent out of school and the rest of the family may be constantly harassed. There is a simple way to protect your family or any other beneficiary even upon your death and this is called Life Insurance.
What is Life insurance?
Life insurance is a type of insurance that involves a contract called a life insurance policy between you (the insured / policyholder) and the insurance company (the insurer) to safeguard your beneficiary upon your death or critical illness. You (the insured) will be required to pay a sum of money called a premium whether monthly or annually so upon your death the insurance company will reimburse your beneficiary (usually family) with death benefits.
Death benefits are the amount paid by the insurance company upon your death to your beneficiary. Life insurance can cover funeral and burial expenses, pay off debts, and manage the day-to-day living expenses of the beneficiary (usually family).
As icing on the cake, you are not required to pay any sum of money on tax on your life insurance as it is considered a personal expense like buying a cellphone.
For you to know how much life insurance coverage you require you need to know the types of life insurance to ascertain what you need.
TYPES OF LIFE INSURANCE
There are two major types of life insurance; they are Term and Permanent life insurance.
TERM LIFE INSURANCE
This type of life insurance lasts for a specified period (between 1 to 30 years) called term. This is why the form of life insurance is called temporary as it doesn’t last forever.
With term life insurance you don’t need to take a medical exam to be approved: With life insurance, your health and age are very important. If you are terminally ill or if you are very old you have a lesser chance of getting life insurance and even if you do, it would be expensive compared to those who get their life insurance at a younger age like 20 years old. Whereas, term life insurance is temporary so it is an agreement for a stipulated time so no need for medical exams as long as you pay your premium on time you will have no issues with the contract.
With term life insurance your beneficiaries will be paid death benefits only if you (policyholder) die during the coverage term: If you have a 20 years term life insurance policy set, your policy is updated and the premium has been paid in full, before the end of the specified period of insurance termination you the policyholder dies your beneficiaries will be paid death benefits.
Meanwhile, if you the policyholder are still living after the 20 years term life insurance has elapsed, the premium that you paid overtime will not be refunded nor returned meaning you would need to renew your life insurance policy.
But you’ll be refunded a sum if you are still alive at the end of the policy with something called the return of premium (ROP).
Term life insurance does not carry any cash value that can be accessed by you but with a critical illness rider added to your life insurance policy you will get coverage over natural death, critical health conditions like diabetes, heart conditions, cancer, kidney, and liver diseases.
PERMANENT LIFE INSURANCE
This form of life insurance does not expire meaning it lasts for as long as your beneficiary lives to mean regardless of when you die, your beneficiary will receive death benefits upon your demise.
You require a medical exam: As said earlier, your health and age are important when taking a life insurance policy. A young smoker that works a risky job like factory work, construction site, or mining will require careful consideration before the policy can be approved, this is because the policyholder’s health is at risk therefore the premium required will be more expensive.
Permanent life insurance carries a savings or investment component called cash value: This cash value requires no taxes as it is considered a personal expense, it grows and can be withdrawn. You may choose to take a loan from the insurance company and use your cash value as collateral.
The downside of touching the cash value is that it affects your death benefits with a deduction of the amount loaned or borrowed.
Cash value goes to the insurance company upon death and death benefits go to your beneficiaries.
HOW MUCH COVERAGE DO YOU REQUIRE?
You can use a life insurance calculator to ascertain how much coverage you need. The amount of coverage you require depends on what your needs are; business, pension maximization, or family financial security.
Business
A company may purchase key person insurance (a form of the life insurance policy) for the owner or a leading executive in the company. In case of a sudden demise, or becoming disabled, the key person insurance policy in place provides compensation to keep the business running until it replaces the executive or closes shop.
Debts and Bills (your financial situation)
How much money do you need to be covered to pay up a debt, mortgage, college tuition, funeral expenses, and anything that may arise after your demise? The death benefits will help take care of the people left behind, even employees, and money lenders will be reimbursed.
Health and lifestyle
Your age, your driving record, health issues, family medical history, lifestyle, alcohol intake, tobacco intake, and anything else that puts your life at risk are carefully considered and they increase your premium rates some may decrease your premium rate like your gender for instance. Statistically, females live longer than men of the same age group therefore they receive lesser premiums because of their gender benefits.
A special needs child requires prolonged care and at the demise of the financial member of the family, the insurance company should provide coverage for the adult child.
Your special needs determine your needed insurance coverage.
BOTTOM LINE
With the death rates recorded annually from accidents, viruses, or health issues, it is no news that anything can happen. Safeguarding your loved ones with the right insurance company is the best way to go. Your little children will know that their parents are taking care of them even in death.
JMJ Insurance will help make this possible, book an appointment today, and discuss the future with a pro. If you have any questions, they will provide all the necessary answers. Tomorrow waits for no one, contact the right insurance company for your future needs.