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.