Having life insurance is an absolute necessity for individuals who want to provide financial security for their surviving loved ones. Life can be very unpredictable, and life insurance allows you to plan for the future so that your end-of-life and funeral expenses are covered. While it may feel uncomfortable to think about the future in this way, covering your bases with the help of a knowledgeable local insurance expert can give you unmatched peace of mind.
If you are looking to get a life insurance policy, you should get the assistance of an independent insurance agency. An independent insurance agent can help you evaluate what your options are and choose the right kind of policy for your needs and budget from among the best and most trusted carriers out there. Here is a breakdown of how to get life insurance, what it covers, and the pros and cons.
What is Life Insurance?
Life insurance policies are a way of preparing financially for the future after you have passed away. The way life insurance policies work is they will pay money to your chosen beneficiaries in the event of your death. Life insurance payouts can work in a few different ways: through a lump sum payout, retained asset account, installments, or annuities.
One of the best things about life insurance policies is that the beneficiaries can use the benefits in a variety of ways. This allows them to take care of any financial responsibilities they may have after your death.
For instance, a life insurance payout can help pay off a mortgage or outstanding consumer debt. Life insurance payouts are also commonly used to cover burial and end-of-life costs, pay for the care of a dependent, or cover household expenses.
Key Features of Life Insurance
Depending on the life insurance policy you choose, you may have different features and coverages. Here is a breakdown of the key features you will want to look for in a life insurance policy:
- Death benefits: The main thing to look for in a life insurance policy is the death benefit it provides. This is what will be paid out to the beneficiaries upon your death, and some policies may include bonuses, such as supplemental life insurance benefits.
- Premium payments: The premium payments are the designated amount that you pay every month or each year to pay for your insurance policy so it stays active. Different policies come with different insurance premiums, which can vary based on not only your preferred coverage amount but also on other factors, such as your age, health, smoking history, driving record, and more.
- Cash value accumulation: Some life insurance policies also provide cash value accumulation, which means that a portion of the premium you pay starts to accumulate over time. These savings can begin to earn interest, which will ultimately add up for you or your beneficiaries to use for long-term savings needs.
Types of Life Insurance
The biggest decision you will have to make regarding life insurance is choosing the right kind of policy. When considering your options, it is best to get the assistance of an independent insurance agent who will take the time to assess your needs, understand your financial objectives, and help you fully understand your options.
Term Life Insurance
Term life insurance is one of the most affordable options and provides coverage for a specific period or term. Because this insurance is only active for a term, if the policyholder is alive by the time the term is over, it will expire.
This is an ideal option if your beneficiaries will have temporary financial obligations but not an ideal option if you have dependents.
Permanent Life Insurance
Permanent life insurance offers protection for the entirety of your life as long as the monthly payments are made. When choosing between term vs. permanent life insurance, permanent life insurance is ideal for those who have a disposable income and other investments. There are three major types of permanent life insurance – whole life, universal life, and variable universal life
Whole Life Insurance
When you choose whole life insurance, the premiums will be fixed, and it offers both a death benefit and a savings account. With this type of policy, a portion of your premium covers the cost of the specified death benefit and the remaining portion of the premium is allocated to the savings account (i.e., cash value account) that grows at either a guaranteed or non-guaranteed interest rate, depending on the option selected.
Another benefit to this option is that you can borrow against your policy. The only potential downside of whole life insurance is that it is one of the most expensive options.
Universal Life Insurance
This type of policy offers greater flexibility than whole life insurance, such as the option to increase the death benefit, if you pass a medical examination.
The savings component of this policy type (called a cash value account) generally earns a money market rate of interest. After money has accumulated in your account, you also have the option of altering your premium payments – providing there is enough money in your account to cover the costs. This can be a useful feature if your economic situation has suddenly changed.
However, you need to keep in mind that if you stop or reduce your premium payment and the savings accumulation is exhausted, the policy might lapse and your life insurance coverage will end.
Variable Universal Life Insurance
This policy type offers the features of a universal life policy coupled with the benefit of using the funds in the cash value account and investing in stocks, bonds, and mutual funds. With this type of policy, you have the investment risks and rewards characteristics of variable life insurance, coupled with the ability to adjust your premiums and death benefit that is characteristic of universal life insurance.
No-Exam Life Insurance
A no-exam life insurance policy does not require you to have a medical exam like most policies do. This option is more convenient, but it can come with higher premiums since it is more risky for insurance providers.
Supplemental Life Insurance
Many employers here in North Alabama offer basic group life insurance to their employees as an attractive benefit. If you participate in a group life insurance plan but want extra coverage to fill the gaps it leaves, a supplemental life insurance policy can help you do just that.
Learn How to Get Life Insurance that Will Work for You
There is an abundance of life insurance policy options out there, which can make it difficult to find the right policy that will secure your family for the future. At Pepper, Johnstone & Company, our mission is to simplify the process of finding the right insurance policy for your situation. Our independent insurance agents will help you every step of the way, connecting you with the best policies that align with your goals and your budget.
Do you need to find the best general life insurance policy that will secure your family in the future? Call Pepper, Johnstone & Company at 256-232-7818 to speak with one of our insurance agents about our policy options.
Don’t Wait to Get a Life Insurance Policy; Get in Touch With Pepper, Johnstone & Company Today!
Choosing an independent insurance agency will help you to receive personalized assistance from local agents who can connect you with the best possible policy options. At Pepper, Johnstone & Company, our agents strive to provide you with insurance policy information and options that allow you to confidently make a decision. Call us today at 256-232-7818 to learn more about our insurance services in Athens or Huntsville, Alabama.