Death is natural. It is an undeniably frightening concept to think about. But it is more terrifying to think about the financially disastrous situation that death can leave the departed one’s spouse and children.
The ability to provide even in the unfortunate event of an untimely demise would undoubtedly grant loved ones with some peace of mind in that situation. This why investing for that grim, yet natural future in the form of life insurance, is of great importance.
Life insurance generally provides financial aid for immediate expenses such as burial costs, water and electricity bills, living expenses, and education, as well as maintain the standard of living, until things start to settle. It can also safeguard businesses from financial instability in the case of the death of a business owner or partner.
There are three main types of insurance plans:
Term Life is the most basic and affordable type of life insurance that appeals more to the younger, healthy generation. Dubbed the “pure” life insurance, this type of insurance offers the basic death benefit protection which means it will pay out the benefit when the named person dies and is designed to cover a specific period of time such as 10 to 30 years.
Once it reaches the specified time coverage and the named person is still alive, you will be able to renew the policy. This type of policy can be used to replace lost potential income if the named person passes away while still employed.
The disadvantage of this type of policy is that it is limited to its time coverage, and the amount of payment would substantially rise in future renewals depending on factors such as age and health status. It is also usually pays out in one transaction rather than in regular increments.
Whole Life, unlike Term Life, is a permanent life insurance policy which means that it provides death benefit protection over a lifetime coverage. Another good thing about this type of policy is that despite being more expensive than Term Life, the payment rates for it is fixed regardless of changes in age and health, which suits those who prefer a budgeted expense.
This type of policy will also accumulate a cash and savings value component after certain amount of time, which enables the named person to withdraw or borrow funds to answer immediate financial responsibilities.
The Universal Life type of insurance also has permanent coverage which provides a death benefit protection as well as a cash and savings value component. What makes this policy particularly unique from the others is its flexibility; the holder can decide how much goes towards the death benefit and the cash value component.
However, it is also more expensive than the Term Life option and fluctuations in interest rates will affect the cash value and the cost of payment.
As it is important to prepare for the future, you should also analyze the right life insurance policy appropriate to your situation so that when the time comes, you could provide your loved ones with the most benefits with the least drawbacks.
Since 1939 Bosworth & Associates has been providing the residents around Tyler, Texas with personal insurance for every need. When it comes to our personal, commercial and business insurance products, Bosworth & Associates is an insurance agency that prides itself on the flexibility and service principles our agents embrace. Contact us for a personal quote or to inquire about our policies, we are always ready to answer your needs.