Whether you are approaching retirement or have just entered the workforce, you’ve probably heard about life insurance. In fact, the concept of life insurance, also known as life assurance, is a common topic for movies and television series episodes alike. In many cases, some character is killed, and at least one of the suspects is being considered because of possible gains from the life insurance policy. So, what’s life insurance for and why bother if it’s going to make your family members want to kill you for the money? Contrary to what you may have seen on screen, most family members will not try to kill you for life insurance in real life, and there are several important reasons that people tend to get life insurance.
What’s Life Insurance for?
What’s life insurance for, anyway? Should anyone put a price on life? Philosophy aside, the goal of life insurance is to leave money to someone after you die. As with other forms of insurance, you’ll pay monthly premiums during the time that the plan is active. Unlike other insurance plans, however, the life insurance plan will not be used during your lifetime. Instead, the insurance company will wait until after your death to make the payout to your beneficiary, which is the legal term for the person who is designated to receive your life insurance plan’s payout. You can generally name anyone you want to be your beneficiary whether this person is a spouse, blood relative, or friend. If you don’t name a beneficiary, your spouse will often automatically receive the payout. Keep in mind that, in some states, a former spouse cannot automatically be a beneficiary.
What Can Life Insurance Cover?
Life insurance can typically cover whatever you want, or whatever your beneficiary needs. In most cases, people want their final expenses, such as any hospital bills and funeral costs, covered by their life insurance policy. However, many people also want to leave something behind for their loved ones after their passing. For instance, if you have a child or relative who depends on you, making that person a beneficiary and purchasing a large life insurance policy can help protect him or her after your passing. Similarly, if you’re taking out a large mortgage with your spouse, a life insurance policy can help ensure that your loved one isn’t left in debt if you pass unexpectedly.
How Do I Ensure That My Wishes Are Carried Out?
Speaking to your beneficiary, or beneficiaries is a good start. Let them know what you want in terms of how the money would be spent. Some people choose to establish a will to ensure that their wishes are followed. However, the name on the life insurance policy will supersede the will. So, if you change your beneficiary on your will, you must also do so with your life insurance agency.
Types of Life Assurance
There are two major types of life insurance policies: whole and term life assurance. A whole life insurance policy is typically more expensive because it will cover you from the start of the policy until the day you die. Meanwhile, a term policy is only good for a preset term. For instance, if you purchase a five-year term insurance policy, but are still alive after those five years, the policy is null and void. Even if you end up dying six years after you purchase a five-year policy, the insurance company will not pay out. Fortunately, some term policies may be renewed.
Whether you need to compare life assurance policies or want to find the best deal, Find Insurance can help. Contact us today.