There are many reasons why a person should get a life insurance policy. This type of insurance provides your family with financial protection in case you pass away. Most people find some peace of mind in knowing that their family will be taken care of after they are gone. Not all life insurance policies are same, though. Before you purchase a life insurance policy, you should ask yourself some questions, to help you discover which kind of policy you need.
What are your goals? Do you want your life insurance policy specifically for the purpose of keeping your family out of a financial bind after you die? Do you want the money that comes from your life insurance benefits to go to a charity? Are you thinking about cashing out your life insurance policy several years from now and using that money to pay off a debt? Be clear about exactly what it is that you want this life insurance policy to do. This can help you in your decision making process.
Can you get life insurance from your employer? If so, then it would be a group life insurance policy. The cost of the premium will be automatically deducted from your paycheck. This is nice, because it means that you won’t be sent a bill that you would have to fit into your budget. It is easy to sign up for this type of life insurance policy when the annual open enrollment period happens. Group life insurance plans don’t usually require you to submit to a physical exam. If you change jobs, or lose your job, you also lose your life insurance.
If you cannot get life insurance from your employer, then you can sign up for an individual life insurance policy. You will have to submit to a physical exam, and will be asked a lot of detailed questions about your health history. The insurance company will use that information to decide it they want to accept you, and if so, how much your premium will be. Individual life insurance is not connected to your job, so you can change jobs without losing it. You also have the potential to upgrade or change this type of policy in the future.
How many years do you want the life insurance policy to last? You can choose between term life insurance, and permanent life insurance. Each has their own advantages and disadvantages. Term life insurance, as the name implies, only lasts for a specific amount of years.
It could be for one year, for five, ten, twenty, or more. Once the term is up, the policy expires, unless you renew it. Term life insurance has less expensive premiums than permanent life insurance will. It can sometimes be converted into a permanent life insurance policy later on. Term life insurance has no cash value. Permanent life insurance does not expire. You must pay the premiums on time, and those premiums will be more expensive than the ones for term life insurance will be. This policy will accrue cash value.
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