Life insurance is something you need. It’s easy to talk yourself out of it because of the cost, but think about it: do you have anyone else who depends on your income? Do you have any debts? Do funerals and burials cost money? The answer to at least one of those is yes.
Life insurance simplified is insurance that will pay if your life ends. When thinking about how much coverage you need, you need to think about funeral and burial costs, providing for your family to replace lost wages, and pay off any debts you have. If you have a family who benefits from your wages, it’s crucial to think about what they’ll have to do if you’re gone. Is there another income in your household that the family can survive on? Will your widow have to take a second job to pay the bills? How will your kids pay for college? If you don’t have life insurance (or don’t have enough life insurance), these are all strong possibilities.
So now that you’re on board, there are a few different kinds of life insurance options. It’s common to pick a blend of these policies with varying limits to fit them to what you need.
- Term Life: This type of insurance is a set amount of time with a set benefit. It’s cheaper because if you don’t pass away during the term of the policy, the insurance company doesn’t pay anything out. There are circumstances that the policy can be converted, but in a basic sense, this is the simplest type of policy. Most people match a term life policy up with the years they have left until retirement to replace their wages.
- Permanent Life: This policy is a hybrid of life insurance and a savings or investment account. While it doesn’t expire, it also won’t cancel (except for maybe if you hit 100 years old). It does carry a cash value, which consists of the premiums you pay in. These are more expensive policies because they do either pay out or are cashed out. There are two types of permanent life insurance:
- Whole Life: This coverage keeps premiums consistent and assures gathering cash value. Whole life is considered to be dependable and safe. You don’t have any control over how it’s invested, but you are guaranteed that it will have a cash value (as long as you’ve paid the premiums. Whole life offers a death benefit and a cash value, but it is typically much more costly.
- Universal Life: This policy has lots of flexibility. You can invest the premiums that you pay into the markets and have the opportunity to earn more when the stock market is doing well. The only worry is that if your investments don’t do well, you could lose any cash value that your policy might carry. This policy is a mix of term and whole life, and the cost falls in between the two as well.
The key to any of these types of policies is that you have to maintain the premiums to keep the policies in force. To help determine what policy is best for you, it’s a great idea to meet with your insurance agent to discuss your needs and what coverage is right for you.
ASK US ABOUT THESE TYPES OF LIFE INSURANCE AND ANNUITIES:
▸ Return of Premium
▸ Whole Life
▸ Universal Life
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If you have any questions or are looking for more information on any of First Neighbor Insurance Agency services, feel free to contact us directly at 217-895-2770 or with use our Quick Quote Form.