Life insurance and health insurance plans are different, although they both provide beneficial coverage. Term life insurance policies and similar plans can help your family in the event of the passing of someone covered by the policy. When you make the required premium payments, the insurance provider promises to pay a cash lump sum to your beneficiaries. This is otherwise known as a death benefit.
There are many life insurance types to choose from including term life, whole life and family life insurances. In general, term life insurance gives protection for a certain period of time, where whole life policies provide lifetime coverage.
Figuring out which one to buy is determined by your needs. You may be able to find cheap life insurance online or in person at an insurance office. But prior to purchasing a policy, be sure to research the costs involved with those contracts.
There are several benefits to choosing the correct life insurance to protect your family members upon death. Owning a policy also aids with estate planning. Continue reading to understand the benefits of life insurance, how to receive quote and learning which type suits you.
What Are the Benefits of Life Insurance?
Before searching for life insurance quotes online, you should first understand the benefits behind each unique policy. Each life insurance plan varies based on the death benefit amounts, term and premium payments. They also provide different levels of benefits.
The purpose behind choosing the right insurance policy is to pick the one right for your needs. A few benefits include the following:
- In the event of a financial consequence due to the insured’s death, life insurance plans provide cash stability when dealing with mortgages, lost income, childcare and more.
- Tax treatment: In most cases, policies are issued income tax-free to the beneficiary. In addition, the cash values in the insurance policy grow tax deferred.
- Flexibility: The chosen life insurance may have flexible terms as the policy holders needs change. This would include increasing or decreasing premium or policy amounts.
- Savings: If you own a cash value life insurance policy, you could have access to funds early. Since these are held in long-term investment, you may see a higher return.
With every benefit there are disadvantages:
- Inability to recover premium investment: This applies if the policy is surrendered early.
- Life insurance may be acquired by other organizations. This can cause confusion for the policyholder.
To avoid major disadvantages, discuss your needs with an agent. They will guide you through the process. As a result, you will purchase the right life insurance plan that matches your financial goals.
What Are the Different Life Insurance Types?
There are many life insurance types to choose from, so be sure to do your research. By doing this you will save time and money by finding the best plan at the best price. In general, there are three life insurance plans.
Learn About Term Life Insurance
Term life policies are designated for a specific term or time period. In general, these policies are good for 10, 20 or 30 years. Sometimes premium payments may change after a renewal period. However, the premium amount remains the same for the coverage period.
This policy is best used to replace income and create a safety net for your beneficiaries. They can then utilize the funds to pay off a mortgage, college or other outstanding debt. If you outlive the term of the policy, the insurance provider will not pay out benefits or provide a refund. A term life insurance policy is the cheapest due to this outcome.
Learn About Whole Life Insurance
A whole life insurance policy can also be considered “permanent” life insurance. There is another type of coverage called universal life insurance plan. You may find that whole life policies offer higher premiums than a term life policy. This is beneficial for many because it covers you until you pass away.
Additionally, the policy functions as a savings component. Over time as the policy accumulates cash, you are permitted to borrow against it.
Learn About Family Life Insurance
Family life insurance is a way to manage coverage for the entire immediate family. Depending on the insurance provider, you will receive one premium rate under one single policy. This way it is easier to manage your family insurance affairs under one account.
How to Apply for Life Insurance Plans
Getting a cheap life insurance quote may seem daunting. But if you do the proper research you may find a life insurance policy that benefits you. Depending on the life insurance company you choose, each will have a specific application process. Here are a few things you can expect.
- Getting a quote: You may be asked simple questions regarding your income, age and health to achieve an online quote. The agent may also ask about medical histories or other factors that affects quotes. For instance, if you are managing diabetes or another life-long condition, then you may have a more expensive premium.
- Application: After selecting the right policy, a full application must be completed before the policy can be administered.
- Medical exam: Given this is a life insurance plan, the insurance provider typically requires a medical exam to determine eligibility. Depending on results, your rate may fluctuate.
- Underwriting: This is the final step toward receiving your life insurance plan. The provider will now review your application and medical exam in order to assess insurance risk.
Here are some items that could affect your life insurance premium upon application:
- Physical and mental health
- Length of the policy
- Amount of coverage
- High-risk activities or travel plans
- Overall driving record
- Family medical history
No matter what the premium or type of insurance policy you choose, it is meant to provide peace of mind. This type of estate planning alleviated financial duress for your family in the event of death. Cheap life insurance is available to those in good health and younger applicants due to low risks.
Nevertheless, be cautious when applying for cheap coverage. Be sure to understand the contract, the benefits and what the overall costs are. Getting a life insurance quote online is only one aspect to gaining the right benefit for you and your family. For instance, you may not be covered for certain end of life events such as suicide from dealing with depression.