Types of Life Insurance You Need To Know: Are you aware of the different types of life insurance? This post is all about the types of life insurance you need to know. Continue reading below:
Life Insurance – You insure your car, home and your health to protect yourself from the unexpected. Have you considered how you can help financially protect those you love?
Life insurance provides financial protection in the event you were to pass away.
You pay premiums to your insurance company, and in return, they will pay your beneficiaries a death benefit — which is an agreed upon sum of money — when you pass away.
Why Do I Need Life Insurance?
Do you have people who depend on you financially? Would they have enough money to cover the substantial costs of a funeral?
What about a mortgage, debt and other expenses you’d leave behind?
Having life insurance can provide peace of mind that your loved ones will have some financial protection to cover these expenses or replace lost income if you were to die.
But, there can be more to life insurance than just a financial safety net if you were to pass away. With permanent life insurance, such as DreamSecure Whole Life and MyLife, there’s the ability to build cash value, leave behind a legacy or even contribute to your retirement.
What Are the Different Types of Life Insurance?
There are two main types of life insurance you’ll frequently hear about: temporary and permanent life insurance.
Temporary Life Insurance
Temporary life insurance — better known as term life insurance — offers coverage for a specific period of time, for example in 10, 15, 20, or 30 year terms. If you pass away while the policy is in effect, your beneficiary will receive a death benefit.
However, if your term life insurance policy expires before you pass away, your beneficiaries won’t receive a payout.
Depending on your policy, you may be able to extend your term after the initial policy term ends or convert it to permanent coverage.
Take a look at American Family Life Insurance Company’s DreamSecure Term Life Insurance and DreamSecure Simplified Term Life Insurance policies to see if temporary life insurance coverage is for you.
Permanent Life Insurance
A permanent life insurance policy, such as whole life insurance, offers coverage for — you guessed it — your whole life (subject to policy terms).
Typically, a premium for whole life insurance will cost more than term life, but that’s because not only does it provide lifelong protection, but the policy also has the ability to accumulate cash value.
Cash value is a component of whole life insurance that you can borrow against* while you’re still living.
You can use it for things like helping with a down payment on a house, college tuition or investing in a business.
Keep in mind, if you don’t pay back the loan plus interest your death benefit will be reduced by any outstanding loan and interest amounts.
When Is Life Insurance Necessary?
Having life insurance is usually a good idea no matter where you are in life, but there are certain times in your life when it’s extra important you’re covered.
For instance, if you’re young and single, getting life insurance helps you plan for the future.
Starting a family?
Life insurance can help ensure they have some financial protection if you or your spouse were to pass away.
Do you have a mortgage?
Life insurance can provide funds to allow loved ones to pay off the mortgage and keep the home if you were to pass away.
Taking care of a loved one?
You can put protection in place to help ensure they could continue their current standard of living once you’re gone.
How Much Life Insurance Do I Need?
Interestingly, how much life insurance you need is completely dependent on your own unique circumstances. You’ll want to take into account things like your income, debts, final expenses and assets, among other things.
When Should I Get Life Insurance?
Your age and health (as well as other factors) play a large role in determining your eligibility for coverage and the premium you’ll pay, so the earlier in life you apply, the better.
Most policies will lock in the premium for the entire policy term, so when you get life insurance when you’re young and healthy, it can be more affordable.