Every American homeowner carries an insurance policy to protect their home and belongings should something catastrophic arise (fire, natural disaster, theft, damage). Likewise, one must obtain car insurance in order to register your vehicle, in the event of an accident or theft. No one ever thinks “Gee, do I really need this? Nothing is ever going to happen to me?” But the one thing that is certain, we will all die at some point. What do our loved ones do when we are gone? How will they pay for our final expenses or continue to live the life they are accustomed to? Life insurance can alleviate that concern.
Currently, 41 million Americans acknowledge that they do not have life insurance even though they know they need it. 36% of these people intend to buy a policy for various reasons each year. Some do and some don’t.
Reasons for buying a policy may vary— from just wanting to get something in place, to protecting their loved ones, to learning about the recently more simple application process (There are some plans that require no physical examination or blood work!).
Term v Whole: Which is best?
Term Life Insurance is coverage that you buy to cover a specific need for a specific period of time, or a term. For example: mortgage protection, college funding, etc. One feature that makes it more attractive, is that it is much less expensive than a Whole Life policy. But it is only there for the specified period-of-time that is listed on the Declaration Page. It will pay out to your beneficiaries, in the event that you pass away within the dates specified. But if you outlive your policy end date, even by one day— they get nothing.
Term is great for covering your mortgage so your loved ones don’t have to worry about where they will live when you are no longer there. As mentioned, it is also a good alternative to cover the costs of your children’s college costs if necessary, so that your spouse doesn’t have to tell your child(ren) that they have to change schools because it is no longer affordable.
Whole Life Insurance is exactly that. It is there for your WHOLE LIFE. The drawback is that in most cases, you have to pay for your WHOLE life, which often means that the premium is generally higher than that of a term policy. The reason being that it is guaranteed to pay out when you die. That makes it a solid financial blanket to cover the needs of your loved ones. Whole Life can be used as a “Legacy” to leave some money to your family or a special charity. It can help your family pay for your services, can help to put some of the pieces back together, and perhaps can help pay the bills until they can figure out a “new normal” that doesn’t include you or your financial contributions. A Whole Life policy can also be used to settle your affairs (paying off credit cards, the mortgage, car loans or whatever else is hanging over your estate that your loved ones will become responsible for upon your passing).
A few things to remember:
- Pricing for a policy is determined by your health and your age. The younger you are the less expensive the premium will be, due in part to the fact that when you are younger there are generally fewer health issues.
- Men usually have higher premiums than women. That is because men have a shorter life expectancy and are more likely to pay out.
- You cannot call Geico after you hit the tree or your house burns down and ask for coverage. You also cannot apply for a cost-effective plan after you are sick. So it is imperative to obtain insurance for your life when you have fewer health issues, making approval more likely.
- You should name your beneficiaries when you take out the policy, so that you know that the money will go where you want it to. You should also name some contingent beneficiaries in case you outlive the primary.
- No one wants to have to tell their children that they have to drop out of school because you can’t afford it now that a parent is gone.
- Most couples don’t think about the fact that when one of them checks out, a substantial portion of the household income can go away. How will you fill that gap?
- Some life insurance policies will even allow for a Long Term Care provision that you can use if you need care prior to your passing. We would be glad to look at policies that offer this, if long term care is something you’re looking to have coverage for.
The best gift you can give your loved ones is SECURITY in the event that you are not around anymore. A Whole Life insurance policy can provide that security. It will be paid out to your loved ones—tax free— to use for bills, tuition, or just to get their feet back on the ground again.
If you may be considering this valuable security measure for your family, Shoreline Insurance Services in Branford can help. Steve and his team are more than happy to guide you as you choose the right plan for your particular needs.