Best Life Insurance

All kinds of life insurance exist, ranging from short-term contracts to lifetime coverage. The right life insurance policy is based on many factors, including but not limited to your age, health status, and financial goals. What are the different types of life insurance, and how do you know which one fits your needs?

• Annuities

  This insurance contract offers a steady stream of income during your retirement. Funds can be made in one lump sum or through the accumulation phase , which begins at the annuitization phase and varies based on the contract details.

• Final Expense/Burial

  This life insurance provides funds to cover the burial and funeral costs. These are usually small monetary amount policies that may or may not require a medical exam.

• Guaranteed Issue

  This policy is a type of permanent life insurance that provides guaranteed approval for a minute amount of coverage, no matter the health status of the person needing it. There is no required medical exam for this coverage.

• Indexed

  This type of universal life insurance policy allows people to invest the cash value collected in market indices, such as the S&P 500. A person can borrow the money tax-free.

• Term

  This type of life insurance policy is permitted for a certain period, usually no more than 30 years. They also have a high death benefit for a low premium. This life insurance policy is best for young and healthy people who need low-cost coverage.

• Universal

  This is another permanent life insurance with flexible premiums and benefit amounts. Policies can build cash value that is investable for more growth and can be borrowed against tax-free when necessary.

• Whole

  Another permanent life insurance policy that ensures coverage for a person’s lifetime is the whole life insurance policy. This policy can build cash value with interest that is borrowable if needed without a tax penalty.

• Cash Value

  Some life insurance policies will allow some portion of the premium to go toward a cash value, which earns a fixed interest amount for growth. You can borrow this money without a tax penalty.

• Death Benefit

  This is similar to a policy’s face value, payable to your beneficiaries upon your death. The payout may be less if you have ever withdrawn money or taken out loans against the policy’s cash value.

• Face Value

  An insurance policy’s face value is how much money your beneficiary will get after you die, so long as the policy is still in effect.

• Riders

  An insurance policy rider is additional coverage you can buy, such as covering your spouse or children, payouts in case of accidental death, and the ability to use the funds when you need them. The fee for a rider can be either a flat yearly fee or a percentage of the policy’s premium.

A life insurance policy offers a level of income protection for your loved ones so that they can pay for any debts/obligations and ensures your assets are protected to a degree. If you fit into any of the categories below, you should get a life insurance policy:

• Married
• Mortgage holder
• Family’s main provider
• Need coverage for burial and funeral expenses
• Need supplemental retirement income
• Hold large debts
• Own a business
• Desire to accrue tax-deferred cash value

Bear in mind that these are just a handful of reasons to consider getting a life insurance policy. The reality is that most people can benefit from one.

Several factors will affect how much coverage you need:

Age

Debt obligations

Family

Income

How long to retirement

According to financial professionals, it’s best to get 10x your yearly salary to replace your income. How much you really need depends on your current situation. For example, if you have a mortgage and are your family’s main provider , you may elect to get more than this. Or, you may decide that the final expense policy is enough.

Example:

David is married with two kids. He currently is the only income earner in his household and earns $70,000 a year. Together, the debt load is $500,000 ($100,000 in loans and $400,000 for a mortgage). David elects an amount that is 10x his salary for his life insurance coverage with an additional $500,000 to deal with the debt obligations. He goes with a 20-year term coverage policy at the lowest possible monthly amount.

The key behind life insurance coverage is to ensure your loved ones don’t have to worry about taking care of themselves if you die.

The right life insurance policy is the one that meets your and your family’s needs. Make sure you understand what coverage amount is right for you and what the money should be used for after you die. Do you want temporary or lifetime coverage? If you like the idea of lifetime coverage, you may find that a term policy can save you money and handle all your debt upon your death.

Determine what you can afford. The majority of policies have a monthly or annual premium with other costs for riders. If you want a low monthly premium, you may want a term policy. If you want an insurance policy that builds in value, you may decide that a universal or whole life insurance policy is right for you. This is where comparison shopping is best.

In simple terms:

Choose what policy type you want – permanent or term

Determine the coverage amount you need and for how long

Speak with an insurance agent to get quotes

Review each quote, comparing them against one another to determine what fits your situation and budget

Set up a time for a medical exam if necessary; if not, wait for the company to approve or deny your policy

Yes, you can shop around and get multiple quotes. The key is to ask questions, do your homework, and talk with a professional about your situation. From there, you can decide which company is best for you.

• What Is Covered…

  The key aspect of a life insurance policy is to ensure that your loved ones are taken care of financially after you die. You can add more coverage to the policy by covering the potential death of your spouse or children. Riders can also help if you become permanently disabled and cannot work or become inflicted with a terminal sickness.

  Life insurance will cover the majority of deaths and could include additional benefits if the death is deemed accidental. Some policies will permit cash value accrual that can be used without a tax penalty after you reach a certain age.

• What Is Not Covered…

  However, most life insurance policies will not pay out if a person commits suicide within two years of the policy becoming active. After this period, the suicide limit is then dropped, and the act is then covered by the policy and company. Also, life insurance companies will not pay out benefits if the person holding the policy lied when answering the medical questions.

  Some company policies will not pay out death benefits that result from high-risk activities (skydiving, bungee jumping, etc.). Your policy lays out the coverage details, so it’s important to talk with a professional insurance company to determine what activities are not covered.

  And, though no one wants to think about this, if a beneficiary murders a policyholder, the beneficiary will not receive the payout. Instead, it will go to a secondary beneficiary. However, this depends on the crime’s nature.

If you’re wondering if you can have several active life insurance policies, the answer is yes. Multiple life insurance policies protect you in case your life situation changes. For instance, you may opt for a $500,000 life insurance policy when you get married. When you purchase a home and grow your family, you may decide to buy a $750,000 life insurance policy to ensure your mortgage is paid off and your children are taken care of.