Have you ever considered purchasing life insurance? Do you live in the Massachusetts area? Are you unclear on what life insurance is and what the different types are? If you’ve answered yes to any of these questions then this article is meant to help you out but dispelling any myths or questions you may have about life insurance, and helping to educate you so you can decide what best suits your needs.
The Definition Of Life Insurance
First it’s important to understand what exactly life insurance is. It’s a contract that you enter with an insurance company and you will be required to pay premiums for this policy. Should the person paying the premium die, the insurance company will pay out a death benefit – which is a lump sum of money – to the named beneficiary(ies) of the policy. This money can be used to pay off debts and help your surviving family members to live in a comfortable manner.
The most common ways the money is used is to pay for the estate taxes upon death, to buy out a business partner who has passed away, and it can even be used for retirement depending on the plan you choose.
Age Doesn’t Matter
One of the things that is really important to get across regarding life insurance is that age doesn’t matter. Any person of any age can purchase life insurance, even children. However, with that said generally life insurance is cheaper the younger the person is, if they are a healthy individual. As a person ages, and starts to develop medical conditions, the policy will become more expensive. So if you’ve been putting it off until you’re older you may in fact want to re-think that decision.
Granted, thinking about death and what will happen if you pass away isn’t a happy topic but making sure your family is provided for and not left with debt to worry about is actually going to make their life much easier so they can focus on the grieving process and not on bills.
Don’t Assume Work has you Covered
A common thought among people is that they don’t actually need life insurance as they have it through their work. While they certainly may have it through work, there are a few things to keep in mind. First off that policy is only valid while you’re working for that employer. Considering how often people change jobs and employers, it could mean that you only end up having that life insurance policy for a short amount of time.
There’s also the fact that most of the policies offered through employers are minimal and offer the basic kind of coverage. There’s a good chance that it wouldn’t be enough to cover your family should the unexpected happen. Instead by purchasing your own policy it follows you no matter where you work, or if you work, and it will cover everything you need it to.
Different Types Of Life Insurance
Saying that you want life insurance is only half the battle, did you know that there are a number of different types of life insurance? Understanding the pros and cons of each type can help ensure you pick the right coverage for your need. Factors to consider are your age, your budget, your health, your debt, as well as other factors.
Term life insurance is ideal for those who want to cover a certain time period, or term in their life. This type doesn’t offer a cash value, the rates can change at the end of the term, and customers benefit from a wide coverage at a lower premium.
Meanwhile if you’re looking for an option that doesn’t expire there is whole life. This is a plan you purchase and pay into. This also means the plan has a cash value. For some people it ends up being worth a lot more, however keep in mind that the premiums will be higher for this option. This one is ideal for younger people because as you age that already higher premium will get higher and higher so you won’t get to lock into that lower price.
Some people actually prefer to combine the two types and build a customized life insurance package. If this is the case it’s best to speak with an insurance provider or agency to ensure you’re picking all the right options.
Murphy Insurance Agency, based in Massachusetts, provides access to a wide variety of life insurance policies and points out the advantage of working with an agency on a one-on-one basis. “We want to ensure that you’re well protected and that your coverage keeps pace as your needs change.” This is really important as you will need different types of protection at different stages in your life.
Be Sure To Get Enough Coverage
Another thing to consider, where people often fall short, is that they consider just how much coverage they need. Obviously the rate increases the more coverage you need, so people often like to keep their premium low and go for less coverage. Be honest as you consider how much your family would need in order to still be comfortable and not be burdened with debt. There is no set calculation you can use to figure out how much you need, instead it’s on a case-by-case basis. A professional in the field will certainly be able to go over your financial portfolio and help you figure out that magic number.
Looking into life insurance doesn’t have to be an unsettling thing, instead think of it as the responsible thing to do so that your family will be left in a good financial position. With proper guidance and information you’ll be able to pick a policy that is perfect for your needs and also provides you with peace of mind. Because the policy is yours, you won’t have to worry about keeping your job and sticking with one company as the insurance policy will always be there for you.