Thinking about life insurance, but not exactly sure how it works? From payouts to plan types, learning all about life insurance policies or which insurance company to choose might seem confusing – but it doesn’t have to be.
Here’s what you need to know about life insurance to protect your family when it counts.
What should I know about life insurance?
1. If Anyone Relies on You Financially, You Need Life Insurance.
Whether you’re caring for your aging mom or just became a mom yourself, a life insurance policy can make a huge difference in the lives of those who depend on you financially.
If something happens to you, your life insurance coverage can help your family replace your income, take care of daily expenses, maintain their quality of life, and pay off debt. It can also allow them to take time off work if needed. Learn more about who needs life insurance here.
2. Your Family Can Use Your Life Insurance Payout To Cover Anything They Like.
One of the most important things to know about life insurance policies is that they come with no strings attached. Once your family has received a payout, how they spend it is up to them. People use often use the payout for:
- Day-to-day expenses, like monthly bills or rent
- Paying off debts, mortgages, and loans
- Income replacement
- Funeral expenses
- Trust funds and legacies
3. There Are Two Major Kinds of Coverage – Term and Permanent.
A term life policy will cover you for a set period of time, usually anywhere from 10 to 30 years. If you die while the policy is active, your family will receive a cash payout. Term life is the most affordable type of coverage, making it a good option for many families.
Permanent life insurance, on the other hand, lasts your entire life as long as you pay the premiums. These plans also build up cash value over time, giving you access to extra savings that you can withdraw or use as collateral for a loan. While permanent policies generally cost more than term life for similar coverage, this type of life insurance policy can be a good fit if you and your family have lifelong financial needs. Learn about your life insurance options by comparing the two kinds of coverage here.
4. It’s Probably Less Expensive Than You Think.
According to a recent study, 44% of millennials overestimate the cost of life insurance by more than 500%. In reality, a healthy 30-year-old male can get a $250,000 term life policy at Fidelity Life for less than $14 a month.
Think of it this way: 50% of our workforce drinks almost $80 worth of coffee every month. That means you can set aside a few dollars each month for life insurance, and still have plenty left over for all those Starbucks runs.
5. It Will Likely Never Be Cheaper Than It Is Right Now.
Why? Because the younger you are when you buy a policy, the lower your rates. Once you buy a policy, those lower rates are locked in for the full length of the policy. Buying insurance while you’re young and healthy also helps ensure that you won’t be denied coverage later if you develop a serious health condition.
Even if you don’t have big financial responsibilities like a house or family yet, either type of life insurance policy can help your loved ones deal with bills you might leave behind if you die, like student loans and funeral expenses.
6. Group Life Insurance Often Isn’t Enough.
Group life insurance tends to come from one of two places: your employer, or member associations like AARP and AAA. These plans can be an easy way to access life insurance at affordable rates.
Since group life policies are also tied to your job or association, though, you typically can’t take the policy with you when you leave. The amount of coverage you get through a group plan is also often smaller than an individual policy, so it might not provide enough protection for your family. Supplementing group life insurance with your own individual plan can help keep you fully covered throughout your career, whether it be term or permanent life insurance.
7. It’s Not Hard To Figure Out How Much You Need.
Everyone’s life insurance needs are unique, but calculating them isn’t difficult. Our term life insurance calculator is a great place to start and can help you create a payout estimate based on your financial needs.
You can also talk to an agent to get a quote for your term life insurance policy, or more personalized guidance for your unique situation.
8. It’s One of the Most Important Ways You Can Protect Your Family.
Much like homeowners or even health insurance, life insurance coverage offers peace of mind for your loved ones and financial protection they can count on. Instead of dealing with messy estate planning or waiting months for wills to be settled, you can be assured that the cash value of your policy will pay out quickly, often within days. In most cases, payouts are tax-free, leaving your family one less thing to worry about.
Life insurance is designed to be there for your family, even when you can’t be. Whether you’re just starting out or have many financial obligations, it pays to learn about your life insurance options.
At Fidelity Life, we want to make sure you’re protected every step of the way. To learn more about how we can help, start your online quote today or give us a call to talk with one of our agents.
At Fidelity Life, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed, and updated regularly to ensure the information is as relevant as possible.regularly to ensure the information is as relevant as possible.
