Understanding the twists and turns of life insurance is one of those tasks that always gets cast aside until it’s too late. There might have been earlier moments when you considered is life insurance worth it? The simple answer is yes! Especially if you have dependents. After all, no one can put a price tag on a feeling of safety for you and your loved ones.
You might be one of those lucky few who already have enough assets and savings to cover your family’s expenses for a long time to come in the event of your demise. If not, paying an affordable monthly premium for a life insurance policy is worth it to ensure that your loved ones receive a lump sum of tax-free money in case you meet an untimely demise.
Think about the costs of full-time childcare if you are the primary caretaker of your child. Can you manage these expenses with the amount in your savings account? It will help to understand the two main types of life insurance policies out there before you decide if a McIver Insurance term life insurance policy is the best for you.
Two Main Types Of Life Insurance
The two main kinds of life insurance policies are ‘term’ life insurance policies and ‘permanent’ life insurance policies. Let’s look at the two types of life insurance policies in detail.
Term Life Insurance Policy
A term life insurance policy is easier to manage because the monthly premiums stay the same throughout the entire duration. A term life insurance policy provides the insured coverage for a specific ‘term’ or period of time. Your loved ones receive a tax-free payout known as a death benefit if you pass away while the policy is valid. Term life insurance policies are cheaper than the other types of life insurance policies.
Most life insurance agents require a medical exam before providing life insurance coverage. This means that younger people can get better rates if they are in good health. The important thing to remember is that you will have life insurance coverage only for the policy duration. You or your loved ones do not receive anything if you outlive the term specified in the term life insurance policy.
Permanent Life Insurance Policy
Permanent life insurance policies are high-end choices because they are active for as long as you live. Permanent life insurance policies allow your loved ones to receive a payout whenever you pass away, as long as you keep paying your premiums on time. A permanent life insurance policy can fall into two categories, a whole life insurance policy, and a universal life insurance policy.
Whole life insurance policies provide the opportunity to build additional cash value on the principal amount by investing funds on a predetermined interest rate. Universal life insurance policies can accumulate profit by investing funds in the stock market. Permanent life insurance policies are more expensive than term life insurance policies because of the ability to invest funds. Permanent life insurance policies are well-equipped for accomplished individuals that want a sense of security for their investment because it has a cash value.
How To Choose The Right Life Insurance Policy?
There’s no right or wrong answer for everybody for this question. The best approach is to put together all the facts related to your budget and unique personal situation to help you make the right choice. Let’s look at the advantages and drawbacks of both kinds of life insurance to help get a clearer understanding.
Advantages Of A Term Life Insurance Policy
Term life insurance policies are easy to manage, affordable, and much less complicated. Insurance experts advise purchasing a term life insurance policy because this is the best value for money. You can easily understand how much coverage you will have, which should be equivalent to covering expenses like college tuition, mortgage payments, and car payments. The best part is that you know for exactly how long you are covered.
Since you can choose all of these factors yourself, there is hardly anything left to chance. You get the best value for money because the term policy is customized to meet your specific needs.
The Main Drawback Of A Term Life Insurance Policy
The one problem with a term life insurance policy is that there is no guaranteed death benefit. You or your loved ones will not receive any payout if you outlive the duration of the policy. You can look for a new term life insurance policy.
Advantages Of A Whole Life Insurance Policy
Whole life insurance policies guarantee a cash payout to your beneficiaries whenever you pass away. A true bonus is that a whole life insurance policy develops cash value if you ever need the extra funds. You can customize your whole life insurance policy to include both an investment and insurance portion. You can receive the profits from the investments quarterly, semi-annually, or annually based on your needs.
Drawbacks Of Whole Life Insurance
A whole life insurance policy can be quite expensive in comparison to a term life insurance policy. The returns on investment might not be that significant. You might be penalized by some insurance providers if you withdraw from the built-up cash value earlier.
Who Doesn’t Need Life Insurance?
Young successful people with no dependents might not need to buy life insurance. People with no dependents who have paid off their property, car, and educational debts might not require life insurance. You might not need life insurance if you have a hefty savings account with multiple assets to cover your daily and future expenses. You don’t need life insurance if you own your car, property, and have children that no longer depend on your income.
So Is Life Insurance Worth It?
Some people might still not be convinced about the worth of life insurance. At McIver Insurance we understand that each person has unique life insurance requirements. This is why we provide a free consultation to help you realize the different implications of life insurance in your specific situation. With professional advice, you can rest assured that qualified insurance brokers will be on your side to provide a solution for all of your life insurance needs.