Your Life Insurance Guide

No one wants to think about their passing, but it's important to prepare early to prevent issues for your loved ones. Life insurance is a great way to help pay for the costs associated with your passing, which can help your loved ones during this difficult time. If you would like to know more about life insurance, keep reading.

What Is Term Life Insurance?

Term life insurance pays money after your passing to help your loved ones pay for your related medical bills, funeral, lost income, etc. No one can access the money until after your passing. Term life insurance has strict limits. For example, you may purchase a 20-year term life insurance policy. After 20 years, the policy expires, and you'll need to reapply again.

Naturally, if you stop paying your premiums during the term, the company will cancel the policy. When you reapply after the term expires, you may find that your premiums are higher because of age and/or new health conditions.

What Is Whole Life Insurance?

Whole life insurance also pays money after your passing, but as you pay into the whole life insurance, it increases in value. For this reason, you can borrow from it while you are still alive to pay for major expenses like a new house. However, if you do not repay this amount — including any interest on outstanding loans — before your passing, your loved ones get less money.

The big benefit to whole life insurance is that it has no limits. Once you purchase the policy, you have it for life. Again, if you neglect to pay your premiums, the company may drop you. Even if you develop a new condition, your premiums can't change, and they can't cancel your policy, as long as you pay your premiums.

How Much Does Life Insurance Cost?

The exact cost of life insurance depends on many factors. First, term life insurance is significantly cheaper than whole life insurance. In fact, in some cases, whole life insurance can cost up to 15 times more than term life insurance. The amount of the policy also plays a major role in the cost of the monthly premiums.

Your overall health also plays a huge role. This includes:

• Age
• Health conditions
• Vital statistics
• Smoking
• Family history

Typically, the unhealthier you are, the older you are, and the worse your habits, the higher your premium, so getting a policy early is important.

In addition, the insurance company will consider your lifestyle, which includes your job. If, for example, your job takes you to dangerous locations, or you participate in cliff jumping on weekends, you may have a higher premium when compared to someone with a safe job and hobbies.

Who Gets the Benefits After Your Passing?             

You choose who gets your benefits after your passing. While most people list their spouse or kids, you can list anyone you want, including people who are not related to you. Make sure to update beneficiaries as needed, such as removing your ex-spouse or adding a new child.

This is incredibly important because life insurance beneficiaries override your will. Beneficiaries on life insurance polies are considered non-probate assets, which excludes them from the will. Therefore, even if you change your will, someone else may get the money if you haven't changed the beneficiary designation.

Both term and whole life insurance policies provide money for your loved ones after your passing. Whole life insurance costs more, but it is a better investment. Regardless of which you choose, the earlier you purchase, the better. If you would like to know more, contact us at Metropolitan Insurance Service Consultants Inc. today.