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10 Things You Didn't Know About Life Insurance
Most people are unaware of the sheer power and benefits that life insurance products are capable of. There are reasons why the top 1%, banks, and businesses have utilized these products for over a century. These powerhouse products have many problem-solving capabilities and benefits that you can take advantage of throughout your life.
1. It's a part of every strong financial plan
We all know that we should have an emergency savings, and put money away for retirement. But did you know that with the right type of life insurance coverage, it could help you do both? Not only does life insurance create money where it didn't exist before for pennies on the dollar, but it helps protect your family from something we have no guarantee of . . . time. And if our time gets cut short unexpectedly, life insurance can provide financially for our families when we are no longer able to do so ourselves.
2. Life insurance is surprisingly more affordable than you think
Most people think that life insurance costs about three times as much as it really does according to the Insurance Barometer Study by Life Happens and LIMRA. Because of this misconception some people never bother to look into getting coverage in place. Sure, if you have health conditions or have waited until late in life to get coverage in place the costs can be high. But that's the beauty of life insurance . . . you can build it to fit your budget. It's better to have some than nothing at all.
3. There are different kinds of life insurance
You should always have a life insurance policy that you own outside of any coverage that you might have through your employer. (Why? Click here to find out.) Life insurance policies fall into two main categories: Term & Permanent. Within each category there are various types of policies. What type you need depends on what your individual needs and goals are. Want to know the basics about the different types of life insurance policies out there? Click here to learn more.
4. You probably need more coverage than you think
Most americans are dangerously underinsured. This is partly due to the reason we went over in point #2, but a large benefit of life insurance is ensuring that your family will have what they need to cover their future needs, not just covering funeral costs. Loosing you will be hard enough to deal with, not to mention adding the emotional stress of figuring out how to pay the mortgage, put food on the table, put gas in the car, and make sure there's money available to send the kids to college to name just a few.
5. Key life events can be great times to re-access your coverage
Getting married? Having a baby? Starting a business? Buying a house? Key life events that happen are excellent times to take another look at the coverage that you have in place and make sure that it's still sufficient for your needs. Which leads us into our next point . . .
6. You can change your life insurance coverage
Life changes, and so does our needs. Maybe your parents bought a small policy for you when you were a baby, but now you're "adulting" and need a bigger policy. Maybe you're starting a family and you now have much bigger financial obligations to think of. Maybe you're wanting to build wealth with the right type of policy. Whatever the case, you should have an annual review of your life insurance policy with your agent to make sure that the policy you have in place still works for you. If it doesn't, changes can be made.
7. Life insurance protects your family, but only if you let it
Make sure to keep your premiums paid (think automatic withdrawal), and keep your beneficiaries up-to-date- after life changes, and have a good relationship with your agent as they will be yours and your family's best resource when the time comes to make your policy do it's job. Keep copies of your policy with your other important documents and make sure the necessary family members know where it's located.
8. Life insurance can be more than just a death benefit
Life insurance can provide many benefits to you that you can utilize during your lifetime, not just covering your final expenses when you pass away. Whether it's paying for long term care, funding your business, supplementing your retirement income, and much more, life insurance can do whatever you build it to do.
9. Life insurance pays out quickly
Generally life insurance policies pay out quickly, within days or weeks, (usually within a month). Once the claim form, and death certificate are sent in to the life insurance company the death benefit is processed and sent to the beneficiary right away.
10. Life insurance payments are generally tax-free
In most cases, life insurance proceeds are paid to your beneficiary tax-free! YEAH !!! How often does that happen?!? It is an amazing way to pass money onto the next generation, creating an inheritance and helping with estate/succession planning. Life insurance benefits can provide large sums of cash which can be used to cover funeral costs, pay estate taxes, etc. The alternative? Leaving them to make hard decisions under duress, and scrambling to figure out where they'll get the money from. In many cases it ends up leaving them with large tax consequences.
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