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Life Insurance 101

If you’re curious about life insurance options but overwhelmed by the excessive amount of information on the subject, look no further. We’ve compiled everything you need to understand the basic ins and outs so you can choose the policy and benefits that are right for you.

First off, let’s talk about what life insurance is. Simply speaking, it’s an agreement made with an insurance company. In exchange for monthly payments, known as “premiums,” beneficiaries of the policy can expect to receive a payment, known as a “death benefit,” upon the death of the insured.

Two Kinds of Life Insurance

The two basic life insurance options you’re likely to encounter are “Term Life Insurance” and “Permanent Life Insurance.”

People purchase term insurance for a specific period of time, usually 10, 20 or 30-year terms. The named insured must die within the policy term for it to pay out. Nonetheless, it’s typically very reasonable and is often used to protect the earning capacity of the named insured. Also, a term policy can be converted to a permanent policy.

A permanent life insurance policy lasts a lifetime, but the cost is traditionally higher. This is because costs are based on the insured’s projected lifespan. A permanent policy accumulates cash (like a savings account) that many people use for retirement, college savings, or to achieve a “paid-up” policy.

Premium Costs

While you might think of life insurance as a purchase reserved for older adults, premiums go up as you age. This means that buying a policy in your 30s or even in your 20s ensures coverage for life and allows you to lock in the best price. With the right policy in place, you can secure income protection, mortgage protection, and college savings for your family, even if you don’t yet have one.

While You’re Healthy

The cost of insurance depends on your age, height, weight, and overall health. Generally, the healthier you are, the longer your life expectancy. Chances are costs will be higher if you take medications or use tobacco. The insurance company will typically require a “Para-Med” exam and copies of your medical records to determine your specific rate.

With the proper insurance, you can rest assured that the needs of your loved ones will be met even after you’re gone. Life insurance is an important tool in building your financial foundation and planning for the future. It’s something everyone should have. Talk to an experienced insurance agent today to choose the benefits that are right for you. Contact our office at (925)447-1744.