A Quick Guide to Life Insurance
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The financial world has changed significantly for the worst in just a few years, making our lives more challenging.
With everything happening all around us, we have to take our family’s financial position very seriously – and one of the best ways to safeguard you and the people you love is by getting the right life insurance.
Life insurance is one of those things that nobody wants to talk about but that everybody needs, especially if you have dependents. But as important as this safety net is, not everyone seems to know what it’s for.
To help you navigate the insurance landscape and help you make better decisions for yourself, we’ll discuss everything you need to know about life insurance.
What is Life Insurance?
A life insurance policy is an agreement between you, the policyholder, and the insurer—the insurance company. Its primary purpose is to provide monetary comfort and peace of mind in difficult times.
To put it simply, life insurance requires the insured to pay a certain amount of money each month to an insurance company so that in the event of your demise, your family will have financial protection and be able to manage without you.
Because of this, life insurance is especially beneficial for individuals or families who depend on one another and whose standard of living would be adversely affected in the event of an emergency.
We can never be certain of what lies ahead, and with the future looming, it appears that more risks are present. Even if you feel confident in your well-being or possess an optimistic outlook on life, unfortunate events such as illness, accidents, and misfortunes may occur at any moment.
Who Needs Life Insurance?
If you have financial dependents, then you need to have life insurance. Financial dependents are people who rely on your income to get through life, such as:
- Elderly parents
- Stay-at-home spouses
- Special needs relatives
Death affects people not just emotionally but also financially. If you’re not insured, your family will have to bear the brunt of your financial responsibilities, as well as any expenses associated with your passing, such as medical bills and burial services.
With life insurance, you’re essentially giving your dependents a security blanket that will allow them to adjust without having to worry about being left in financial distress should something happen to you.
Types of Life Insurance
There are several types of life insurance, and each type of policy has its own set of features and benefits.
To help you choose a policy that meets your specific needs, we need to discuss different types of life insurance.
In general, there are two broad categories of life insurance: term life insurance and permanent life insurance.
Term Life Insurance
Term life insurance provides coverage for a specific period of time, such as 10, 20, or 30 years. In the event that a policyholder passes away during their term, their beneficiary will receive the prearranged benefit amount.
On the other hand, should they survive until the policy’s expiration date, all payments made are typically forfeited.
That said, there are some policies that will let you convert it to a whole-life policy once it expires. Others are renewable, albeit for a higher premium.
Additionally, there are various types of term insurance you should be aware of.
- Decreasing term. A renewable policy with decreasing policy coverage at a predetermined rate.
- Convertible term. A policy that you can convert to permanent insurance.
- Renewable term. A policy that has predetermined rates, which increase with every renewal.
Permanent Life Insurance
Permanent life insurance is a type of life insurance that provides coverage for the entirety of your life as long as you continue to pay the premiums.
Unlike term life insurance, which only provides coverage for a specific period, permanent life insurance is designed to provide lifelong protection. Some policies also have other benefits bundled in, such as investment opportunities.
However, because permanent life insurance provides lifelong coverage and builds cash value, it tends to be more expensive than term life insurance.
Just like term life insurance, there are also different types of permanent life insurance.
- Whole life insurance. This type of policy provides coverage for the policyholder’s entire life and typically has a fixed premium. It also builds cash value over time, which the policyholder can use as collateral for loans or use to pay premiums.
- Universal life insurance. Similar to whole life insurance, this policy also builds cash value but lets you adjust premiums and the death benefit.
- Variable life insurance. Variable life insurance combines elements of term life insurance and investments. It has a guaranteed death benefit, but the overall value depends on the performance of those investments.
- Variable universal life insurance. This type of policy combines universal and variable life insurance. It allows the policyholder to invest the premiums in a range of investment options. The death benefit and cash value of the policy depend on the performance of the investments.
How Much is Life Insurance?
Many people consider life insurance premiums to be just another overpriced bill they have to pay.
Contrary to what many people assume, life insurance premiums don’t need to be a financial burden. In fact, the sooner you start to save for life insurance, the cheaper your premiums will be.
The cost of cost of life insurance depends on a variety of factors:
- Age. Young people typically have a lower life insurance rate than those who are older due to the fact that they are less likely to pass away earlier.
- Gender. On average, life insurance premiums are higher for men than women due to their shorter life expectancy.
- Health. Individuals in good health pay lower premiums than those who have pre-existing medical conditions or participate in activities that put them at a higher risk of injury and illness, such as smoking.
- Occupation. People in high-risk professions, such as construction workers and law enforcement officers, may pay higher life insurance premiums due to the risk of death or injury associated with their job.
- Lifestyle. Individuals who engage in risky behaviors, such as extreme sports or high-risk hobbies, may pay higher premiums because they are at a higher risk of death.
That said, these factors can vary greatly depending on the specific policy and provider, so it’s important to shop around and compare life insurance policies before making a decision.
How to Get Life Insurance
Considering life insurance policies can be a difficult topic to discuss, but the right insurer will make it easy for you to obtain an ideal policy that works with your individual requirements.
Here are the common steps involved when obtaining life insurance coverage.
- Think about your purpose for getting life insurance. This will help you determine the best type of life insurance for you.
- Prepare commonly-required information such as personal details, medical exams, family medical history, and driving records.
- Compare different policies to find the best fit for you. Make sure you understand all the policy details before signing anything.
Here at Magnum Insurance, we want to make life insurance more accessible and affordable. Our policies are tailored to meet the unique needs of our customers, so if you’re looking for life insurance, we’d be more than happy to discuss your options including whole life insurance vs term life insurance.
Nobody wants to think about death, but it’s an essential task for those who want to ensure a secure future for their loved ones.
With Magnum Insurance, you can ensure that your loved ones are financially secure in the event of a devastating situation. We offer hassle-free quotations and life insurance rates tailored to fit any budget – providing peace of mind for you and those closest to you.
Call Magnum Insurance and get a free quote today!
Magnum Insurance makes Life Insurance easy
Insurance should be easy, and with Magnum Insurance, it is. Get your online insurance done at your convenience now!
Flexible payment options including cash. Call, visit a store, or make a payment online by logging into your account.
Manage your policy. File and track a claim. Do it all with a few taps on your smartphone.
No one likes to file or manage a claim. That’s why we make the process easy with online forms and dedicated agents.
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