Do you know what type of Life insurance you have and what it is worth?
By Vincent Hylton
An Independent Insurance Agent Life Insurance
One of the most important investments a person should undertake is a Life Insurance Policy. Millions of folks out of good intentions and concern about their family’s wellbeing after they pass away invest in a life insurance policy. However, what is the purpose of having a life insurance policy? Is the beneficiary always guaranteed a cash benefit when the policy holder of a life insurance plan dies? The answer is… “yes, and “no!!??” You may or may not be surprised by those answers.
There are countless numbers of folks that have been disappointed, and some very angry with the Life Insurance policies they invested in after paying for many years. One main reason for this anger or disappointment is a lack of understanding the policy they invested in. Below are just some of reasons folks get angry or dis-appointed:
- Lack of understanding the type of policy they invested in.
- A love one dies and the beneficiary gets no cash benefits from their insurance carrier after paying for many years, because the policy holder died of natural causes and not accidental death. (An accidental death only term policy)
- Many folks had their policies ended/terminated/dropped, or benefit amount reduced, because they suffered a life threatening medical condition, such as heart attack, stroke, kidney disorder… etc. after paying for many years.
- You got older and your policy terminated.
- Premiums that were paid initially have skyrocketed/gone through the roof, over a period of time since the policy’s effective date.
Types of insurance – Term and Whole Life
Basically there are only two types of life insurance: “Term” and “Whole Life.”
Term insurance as explained by some sources is a type of life insurance policy that provides coverage for a certain period of time, or a specified “term” of years. If the insured dies during the time period specified in the policy and the policy is active – or in force – then a death benefit will be paid. It is important to note that premiums for example a 5-year renewable term can be level for 5 years, then rise to a new rate reflecting the new age of the insured, and so on… every five years. “Some” longer term policies will guarantee that the premium will not increase during the term; others don’t make that guarantee, enabling the insurance company to raise the rate during the policy’s term. (www.investopedia.com/ask/answers)
Whole Life Insurance – Is basically for the person’s whole life or until age 100. The benefits of a whole life insurance policy is that it builds cash value which typically after the first two years. The cash value serves two purposes, 1) you can borrow the cash built up and pay back with a small interest rate, or 2) leave the cash value to pay your premiums if you run into some financial hardships and cannot pay your premiums. When the policy holder reaches age 100, the policy endows, and the full benefit amount is paid to the policy holder.
Agents — It is the duty of a life insurance agent to ensure that they help their clients to break down the benefits of a life insurance policy in which their clients intend to invest. After explaining what the benefits are, the client should at least have basic knowledge about their investment, and the long term goals and effect of such investments if it is in his or hers best interest for the client as well as the clients family members.
Final Expense Whole Life Policy — What is a Final expense Whole life Policy? It is a whole life policy which falls into the category of permanent coverage that normally insures clients between the ages of 40-85 years old (in many cases covers individuals from 30 days old). These policies are typically guaranteed issue, meaning, they will cover clients with most health issues which are considered normal in many instances, and in some cases chronic health conditions as well.
The key to choosing a Final expense Plan that suits your needs is “not only to cost shop,” but also to find out what details are in the benefits they provide, and is it a right fit for your individual and family’s needs.
Important questions to ask when looking for a Final Expense Life Policy:
1) Is it a permanent coverage with whole life protection?
2) Do my premiums increase?
3) Do my benefits decrease after I reach a certain age?
4) Will the policy be cancelled because of my age or if my health changes?
5) Do I require any medical exams?
6) How long does it take to pay a death benefit after a loved one passes?
7) Does the policy provide a family support service to assist families when a policy holder dies? (Example cost shopping your funeral, taking the burden off your grieving family members during that emotionally stressful time).
Life insurance policies are important investments. Knowing what type of life insurance to invest in is the key to having peace of mind and knowing that your family you left behind will not have the burden of struggling to find the funds necessary for your final expenses.
For more information call Vincent Hylton at (954) 592-6585.