Did you know that September is Life Insurance Awareness Month? It is an industry wide awareness month, so it is very likely that your insurance company is focusing on life insurance right now. This is a great time for you to ask your insurance agent questions about your existing life insurance policy. If you do not have life insurance, for yourself, your spouse, or your children, this month may be a good time to make sure that everyone is covered.
Life insurance is a way to provide some financial protection to your family in case the worst happens. It is a tax free way of making sure that there will be enough money to pay for burial expenses, debts, and loss of income in case you, or your spouse, pass away. If you start a life insurance policy on your child, the policy itself can be turned over to that child when he or she becomes an adult.
When you start a life insurance policy, you will be asked to name some beneficiaries. Make sure you designate at least one beneficiary. This way, the money from your life insurance policy will go to that person, instead of to your “estate”. That person will have access to those funds almost immediately, and can start using them to pay funeral costs. If the money goes to your “estate” instead, well, then your loved ones will have to wait until it goes through probate before those funds will be accessible. You can change the person whom you have designated as a beneficiary whenever you want to. So, if you named your spouse, and later get a divorce, you choose someone else as your beneficiary.
There is more than one kind of life insurance. Term insurance is a more temporary version of life insurance. It gives you specific kinds of protections during the designated term, and will pay a benefit if you become deceased during that term. If you feel that you only need a life insurance policy until your mortgage is paid off, or until your children are finished with college, this might be the type of policy to look into. The other alternative is permanent insurance, which, as the name suggests, does not disappear after a specific term ends. This kind of life insurance accumulates cash value.
Which kind of life insurance policy should you get? This depends on what your finances are like. You might want to consider the amount of money that you still owe on your mortgage. You will want to figure out the amount of money that is necessary for your family to continue their standard of living after you are gone. An insurance agent can help you come up with a solution, and a life insurance policy that fits your needs.
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