Top 7 Frequently Asked Questions About Life Insurance

Shopping for life insurance is an important process and deciding how much and which kind of life insurance you need can be difficult. Utilizing a licensed independent insurance agent can take much of the stress out of the process.

Over the years, we have been asked many questions about life insurance. We thought compiling this list might help answer your questions as well.

Do I Need Life Insurance?

Another way to ask this is, “What will be the primary purpose of your life insurance policy?” The answer here is frequently multifaceted and depends on whether you are married and if you have children or others who are dependent on you.

Life insurance is not required, but for most people, it is certainly needed. It is important to remember that life insurance is not for you but your loved ones.

Why Do Insurers Require Medical Exams?

Most prospective insurers want to know how risky you are to insure or, to put it bluntly, how likely you are to die during the term of your policy. They perform this “classification” process, which determines your premiums. For example, mortality statistics show people who smoke and/or are overweight will die sooner than those who do not have these risk factors.

What Can Life Insurance Pay For?

• Continuing the family’s income.
• Leaving a legacy for one’s children or grandchildren.
• Making a charitable contribution.
• Paying off a mortgage or other large debt.
• Paying for a funeral.
• Buying or selling interests in businesses.
• Preparing for a special-needs situation.
• Investing in a child’s college education.

Do I Need Life Insurance if My Employer Provides Some Coverage?

Employer-provided group policies typically provide an affordable and straightforward way to enroll in life insurance without taking a medical exam. On the other hand, group policies may only pay an amount equal to one or two years of salary or a similarly limited amount, which may not be sufficient to cover your family’s needs.

Furthermore, if you change jobs, you most likely will not be able to take your life insurance policy with you. Keep in mind, the older we become, the more difficult and expensive it may be to obtain life insurance. Therefore, having a personal policy to supplement your employer-provided policy may be prudent.

How Much Life Insurance Do I Need?

This is another area where an independent agent can provide you with options. If the primary breadwinner were to pass, how much money would the family need to pay off debt, fulfill current financial obligations, and provide ongoing income to maintain the current lifestyle?

Be sure this amount includes other concerns such as childcare or housecleaning that may be required if you are absent.

What Are the Different Kinds of Life insurance?

There are dozens of life insurance policies, but an agent will be able to review your situation and recommend what kind of policy is best suited for your needs. Here are some of the more popular ones:

Term life insurance is the most basic and simple type of life insurance. It only pays out if the policyholder dies during the policy’s term, which typically ranges from one to thirty years. Most term policies do not include any other benefits. This kind of insurance offers low premiums.

Whole life insurance is a popular type of life insurance. It also pays a death benefit, but unlike term life, most plans include a cash value, which acts as an investment-like, tax-deferred savings account.

Universal life insurance allows the user to set the amount you pay toward premiums (flexible premiums) and the amount you pay toward death benefits (adjustable death benefits). The difference between the cost of your premiums is deducted from the cash value of your insurance.

Guaranteed universal life insurance is a form of universal life insurance that does not expose the policyholder to market risk. Your premiums remain constant regardless of how market indexes perform, as the interest rates on your plan are built into the premiums when you purchase the insurance.

What Is the Best Way to Buy Life Insurance?

You can buy life insurance through many platforms. The most effective way is to use an independent insurance agent. If you are looking for personalized advice and a straightforward way to ask questions, then an independent agent may be the best choice.

The cost typically does not increase when you use an independent agent, and the agent can do much of the advance work for you. The agent can also explain the coverage and help you determine what product is best for you.