There are several reasons why people buy a life insurance policy, which pays a death benefit and protects the interests of the policyholder’s survivors. Your financial and personal goals will help guide you towards the best life insurance plan for your needs. Here are some key points to keep in mind when buying a life insurance policy.
Two main types of life insurance
The two most common types of life insurance plans are life expectancy and permanent or full life. A lifetime plan costs less but only offers coverage for a specific period, which can be anywhere from 1 to 30 years. It is a popular option among young people who have not yet established families or future plans. A permanent life plan costs more and lasts your entire life, as it provides broader benefits, including a cash account that grows with investment. Permanent plans are best suited for growing affluent families who can afford the higher costs. Lifespan plans usually have fixed low costs. Both types of plans provide payments upon the policyholder̵7;s death based on maturity and economic factors. In some cases, lifetime plans can be converted into permanent plans.
How life insurance helps with financial planning
Life insurance can provide benefits that become part of the family’s long-term financial planning. The insurance will pay your final expenses, such as funeral expenses, as well as provide the following:
- Income compensation:
After your death, the insurance will pay the beneficiaries money that you would have received in income.
- Expenditure on long-term care:
Some plans allow you to add coverage for long-term care solutions such as assisted living.
- Tax-free asset allocation:
The policy allows beneficiaries to receive benefits without paying tax on them.
- Emergency funds:
A permanent plan is like a savings account that grows and gives you urgent financing when you need it.
- College planning:
Benefits can pay for your children’s college education, helping them establish their careers and personal goals.
Meet financial responsibility
Part of the decision to start a family should include taking on different financial responsibilities. It is important when you have a child to develop a financial plan for their future. A life insurance plan helps to provide a smooth transition to a sustainable solution for your family.
Getting a permanent life insurance plan helps give your family security while you live and afterwards. You will be able to borrow from your cash account or withdraw cash for any reason. It provides benefits to loved ones without going through a long, frustrating court process.
It is important that all your beneficiaries know that they are included in your insurance. If they do not know, it is possible that they will never apply for benefits. Over time, you can change your list of beneficiaries, so it’s best to review the list periodically. Upon your death, all beneficiaries must file a claim with your life insurance company to receive a payment.
Contact us today at Abbate Insurance Associates for more information to determine the right life insurance plan for you and your family. Be aware of the risks that affect your life and well-being for loved ones.