3 important life insurance facts to know
Choosing life insurance is one of the most important financial decisions Americans can make.
This type of insurance, unlike some other well-known types, provides financial support for both policyholders and their beneficiaries in the event of death. In exchange for a payment to a provider each month, the insured can rest easy knowing that their loved ones will have a financial safety net after they die.
The advantages of having life insurance are significant. But, like all financial investments, it helps to fully understand this form of insurance in order to secure the most cost-effective and reliable policy.
If you're in the market for life insurance or want to adjust your current coverage, then reach out to a life insurance expert now. They can answer any questions you have and help you get started with a free price quote so you know exactly what to expect.
3 important life insurance facts to know
When shopping around for the best life insurance make sure to keep these important facts in mind.
There are multiple policy types
Life insurance doesn't come in one standard size. There are different types to choose from, each with its own unique advantages and disadvantages.
Term life insurance, for example, is applicable to certain time frames or terms of the insured's life. It's often cheaper than other insurance types but it will need to be renewed when the term expires. Whole life insurance is more expensive but it lasts for the duration of the policyholder's life. It also has a desirable cash-out option (more on that below).
There are also universal, variable and no-exam life insurance policies to choose from. The best type is generally specific to your long-term goals and your current budget. It's helpful to speak with a life insurance agent who can help you build a budget-friendly plan.
You can cash out your policy (potentially)
Life insurance can be viewed as just another bill to pay each month with no practical use for the insured while they're alive. But that's not always the case. As mentioned above, whole life insurance policies have an option that allows policyholders to access the cash portion of their policy.
Just understand that if you go this route the amount you ultimately owe on the policy's outstanding principal (and interest) will be taken from the death benefit before your beneficiaries receive it.
But this still may be a better option than going to a bank or taking a personal loan because you won't have your credit checked in order to get the funds. You'll probably have better repayment terms, too.
This is especially beneficial considering the amount of money a policy could be worth.
Coverage amounts could be significant
While the amount of coverage you get depends on a variety of factors, you could potentially be eligible for hundreds of thousands of dollars - or even millions.
That may sound like a lot of money. But if you're young, healthy and ready to take a medical exam it's likely you can get a policy for a substantial amount.
Just make sure to start as soon as possible. Life insurance is not one of those things that will get cheaper if you wait. In fact, the longer you wait the more you will likely pay for coverage. And, if you start significantly later, you may end up paying more for less coverage. So it pays to start early (think under 40). Insurance companies are more likely to approve you for a $1 million policy when you're younger and unlikely to have your beneficiaries cash it in.
And know your budget in advance. It won't matter what amount an insurance provider will approve you for if you can't afford the monthly payments required to maintain it.
See how much life insurance you can qualify for now.
The bottom line
Life insurance can be complex so it pays to know what you want, when you want it and how much you can afford. Different policy types have different options and your coverage could vary dramatically.
Do your homework and speak to an agent now who can help guide you through the process.
