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Life Insurance Basics
A life insurance policy is a contract between you and an insurance company that provides your named beneficiaries with a death benefit payout upon your death (if your policy is in good standing). You pay for your life insurance coverage with monthly premiums, which are calculated based on the size of your policy and other factors.
Who Needs Life Insurance?
If anyone depends on you financially, you may want to consider purchasing a life insurance policy. Life insurance is designed to lessen the financial burden left to family members after the policyholder's death. Life insurance death benefits are commonly used to:
- Pay for funeral and burial expenses
- Continue making mortgage payments
- Support a business
- Set up an inheritance
- Pay estate taxes
- Maintain a family's standard of living
Types of Life Insurance
There are two main types of life insurance: term life insurance and permanent life insurance.
Term life insurance covers you for a set amount of time (or term). These terms are usually set in five-year increments, and typically last up to 30 years.
Term life insurance is popular among those who want to cover loved ones during crucial periods, such as when your children are growing up, and eventually heading off to college.
With a term life plan, though, your beneficiaries won’t receive death benefits if you die after your term has expired.
Permanent life insurance, on the other hand, allows you to maintain coverage as long as you pay your premiums on time and in full.
In general, term life insurance is less expensive than permanent life insurance policies. So if you only need coverage for a specific period of time, a term policy may be your best bet.
However, your policy's costs can be impacted by a number of factors, including:
- Your age
- Your health
- Whether you engage in risky hobbies
- Your family's medical history
- Your medical exam results (if required)
Typically, insurance companies require you to take a medical exam before they will sell you a life insurance policy. The results of your medical exam help the insurer gauge how big of a financial risk you are to insure. Generally, the younger you are when you apply for a policy, the more likely you are to be approved for coverage and the more affordable your monthly premium will be.
Speak With an Agent
A licensed agent can help match you with a life insurance policy that makes sense for you and your family. Speak with a licensed agent now at 1-800-966-7169.
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Applications for life insurance may be subject to acceptance by insurer. Issuance of the policy may depend upon answers to health questions. Rates and coverage amounts depend upon the carrier selected. Your policy may be subject to underwriting approval. You will receive only the benefit amount in the policy issued.