In its simplest form life insurance policies are designed to cover loss of income, end-of-life expenses, funeral costs or other financial needs that your family may have in the unfortunate case that you, the policy holder, die unexpectedly.
Two basic types of life insurance:
- Term Life Insurance – Term policies usually offer the greatest coverage for the lowest initial premium and can be a great solution for temporary needs or a limited budget.
- Permanent Life Insurance – Permanent policies usually make more sense if you anticipate a need for lifelong protection.
- The ability to accumulate cash on a tax-deferred basis.
- The ability to withdraw or borrow against accumulated cash.
Important questions to consider when speaking with an advisor about your insurance needs:
- How much life insurance do I need?
- What type of policy should I buy, term or permanent?
- What are accelerated death benefits and how do they work?
- Should I buy a basic life policy or should I consider the “bells and whistles”
Below is a list of riders (also known as “bells and whistles”) that you should take into consideration:
- Disability Wavier of Premium Rider – specifies that if you become totally disabled for a specified period of time, you don’t have to pay premiums for the duration of the disability.
- Accidental Death Rider – also known as living benefit which under certain circumstances allow the insured to receive the proceeds of their life insurance policy before they pass away.
Life insurance is an important tool for your family’s financial planning and it is not a one size fits all fit. Therefore, take your time and do your due diligence when determining your family’s needs and assessing your options.
To learn more check out Life Insurance FAQ from Trusted Choice.