Life Insurance Questions Answered

Life insurance often scares people. It can be complicated and people rarely think about what will happen after they die. But life insurance can really pay out to your loved ones if you do pass away, saving them from financial burden.

If you pass away, the insurance company will pay a benefit to your pre-selected beneficiary of a pre-selected amount. Simply, it is taking care of your family from beyond the grave

Like any insurance, life insurance is about assessing risk. Here are some answers to some commonly asked questions.

Are all life insurance policies the same?

Not at all. Life insurance policies vary is length, payout and premium, all depending on your needs.

What type of life insurance is out there?

There are two common types of life insurance, permanent and level term. A permanent policy is less popular because it requires a premium to be paid for the rest of your life. A great advantage to a permanent policy is that is can act like a savings account and you can borrow against it if you need the cash before you pass away. The downside is that the monthly fees can be high and might not be worth it in the long run.

The most common type of insurance is called a level term policy. This type of policy allows you to select a term of coverage (10, 15 or 20 years, most typically) and you would pay a monthly premium throughout that coverage. Think of it like car insurance. Once you stop paying the premium, your coverage is over whether you die or not.

How much money should be policy be worth?

The end payout of your policy depends greatly on your income and what you can afford. Some agencies encourage policy holders to get a life insurance policy about 10 times your annual income. The thought is that if you pass away, the money can be used to continue the running of your household until the other family members get back on their feet.

But experts caution to look past just income coverage. Life insurance coverage should consider covering funeral costs and repaying any debts. Life insurance is not supposed to be a post-life lottery for family members left behind, but as a way to close the gap and ease the burden.

Can I get life insurance through my employer?

Check with your company’s HR department first to take advantage of any risk group deals. Often insurance agencies will put companies in a risk pool. The bigger the pool, the cheaper the premium. Compare these rates with the free life insurance quotes you can get from this website to find which plan works best for you. Remember, cheaper isn’t always better. Look at total coverage and payout to ensure the best plan for your family.

Can I change the beneficiary?

Yes, if you have any big changes (divorce, remarry, etc), you should make changes on your policy immediately. Take time every year to review your policy to make sure that is still satisfies your needs.

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