Several reasons exist why people buy life insurance, which pays a death benefit and protects the interests of the policyholder’s survivors. Your financial and personal goals will help guide you toward the best life insurance plan for your needs. Here are important points to think about when it’s time to buy life insurance.
Two Main Types of Life Insurance
The two most common types of life insurance plans are term life and permanent or whole life. A term life plan costs less but only offers coverage during a specific term, which might be anywhere from 1 to 30 years. It’s a popular option among young people who haven’t established families or future plans yet. A permanent life plan costs more and lasts your entire lifetime, as it provides wider benefits, including a cash account that grows with investments. Permanent plans are best suited for growing affluent families that can afford the higher costs. Term life plans typically have fixed low costs. Both types of plans provide payouts upon the policyholder’s death based on term and financial factors. In some cases, term life plans can be converted to permanent plans.
How Life Insurance Helps with Financial Planning
Life insurance can provide benefits that become part of the family’s long-term financial planning. The policy will pay your final costs, such as funeral expenses, as well as provide the following:
- Income replacement:
After your death, the policy will pay beneficiaries money you would have received in income.
- Long-term care expenses:
Some plans let you add coverage to long-term care solutions such as assisted living.
- Tax-free asset distribution:
The policy allows beneficiaries to receive benefits without paying taxes on them.
- Emergency funds:
A permanent plan is like a savings account that grows, giving you emergency funding when you need it.
- College planning:
Benefits can pay for your children’s college education, helping them establish their career and personal goals.
Meeting Financial Responsibilities
Part of the decision to raise a family should include committing to various financial responsibilities. It’s important once you have a child to develop a financial plan for their future. A life insurance plan helps provide a smooth transition to a sustainable solution for your family.
Getting a permanent life insurance plan helps provide family security while you’re alive and afterward. You will be able to borrow from your cash account or withdraw cash for whatever reason. It provides benefits to loved ones without going through a long, frustrating court process.
It’s crucial that all your beneficiaries know they are listed on your policy. If they don’t know, it’s possible they’ll never file for benefits. Over time you may change your list of beneficiaries, so it’s best to review the list periodically. Upon your death, beneficiaries must each submit a claim to your life insurance agency to receive a payout.
Contact us today at Abbate Insurance Associates for more information to determine the right life insurance plan for you and your family. Be aware of the risks that affect your life and the well-being of loved ones.