Buying life insurance is generally not a topic anyone likes to think about. After all, who enjoys thinking about a time when you may no longer be around to provide for your loved ones? However, there’s never a bad time to consider providing for your loved ones in the event you can no longer do so yourself. It can provide you peace of mind knowing that they’ll be taken care of and a way of showing them how much they mean to you. While purchasing a life insurance policy can seem like a difficult process, it’s not as intimidating as you may think. Here are some basics to know when it comes to buying life insurance.
Term vs. Whole Life insurance
Before you move forward with purchasing a policy, one of the first things you should decide is whether you want term or whole life insurance. There’s a difference between term and whole life insurance and depending on the level of benefits you wish to provide your loved ones. Term life insurance provides coverage for a specified period of time, usually 20 or 30 years, and is designed to pay out a benefit to your designated beneficiaries in the event of your death. Whole life insurance provides lifelong coverage and has an investment portion of the policy where your money grows tax-free. Term life insurance is often much cheaper than whole life insurance because unlike whole life insurance, term insurance has no cash value.
How to Choose
Most people opt for term life insurance because of its affordability. If you’re looking for coverage for certain periods of your life, such as when you’re raising children or paying a mortgage, then term life insurance is probably a safe choice. If, however, you have a lifelong dependent, such as a child with special needs, or your assets are complicated, you might benefit more from a whole life policy.
What it Covers
Term life insurance is paid in a lump sum and as a way to settle your final debts so your family doesn’t have to, pay for your burial costs, and ensure your loved ones are taken care of initially after your death. Whole life insurance pays out dividends over time, ensuring your loved ones’ needs are taken care of years after your death.
Who to Name Beneficiary
This is a complicated question and should be carefully considered before you move forward. The simple solution in naming your beneficiary would be to name your spouse and children, but can be more complicated than that. Certainly, naming your spouse as your beneficiary makes sense, but in the event you and your spouse die, leaving money to children may not always make sense, especially if they’re minors and legally not allowed to handle their inheritance. In the case of minors, there are living trusts and guardians you can assign to your child to handle their financial interests until they’re old enough to do so on their own. You can also assign a living trust or guardian to handle your policy if you have a child with special needs who will never be able to make financial decisions on their own.
Who to Purchase Through
Once you’ve decided what type of policy is best for your specific needs and know who you want to name as your beneficiaries, the next step is to choose the right broker to purchase your insurance. You can look online, which can often be impersonal. Many people suggest that you talk with your local insurance agency to see what they can recommend. Talking to someone in person about such a sensitive topic is often best to determine your needs and make policy recommendations.
When it comes to finding the right life insurance policy for your loved ones, you want to be sure you’ve done thorough research, understand your coverage, and discuss your options. In return, you’ll have peace of mind knowing those you love most are taken care of. For more information or to receive a quote visit: discountlifecover.co.uk.