Why Should I Have Life Insurance?

While you cannot plan for everything that life brings, life insurance can be a valuable tool to help you plan for your family’s finances in the event of your death.

What is life insurance?

Life insurance is a contract between a person (the insured) and an insurance company. The insured pays an allotted premium for a defined amount of time, and in return, the insurance company will pay the beneficiary of the insured a sum of money at the time of the insured’s death (subject to policy terms, conditions and limitations). The death benefits from life insurance policies can be used by the beneficiary for any lawful purpose, including without limitation:

• Paying off any outstanding debts (such as mortgages, car loans, etc.)
• Paying for end-of-life and funeral arrangements for the insured
• Educational funds for loved ones
• Ongoing living expenses
• Recreational purposes
• Charitable donations
• Financial investments

What are the Two Main Types of Life Insurance?

There are normally two types of life insurance, term life or whole life.

Term life insurance is a contract that is set for a defined period of time. During that period of time, the insured would pay their premiums and if the insured was to pass away during that period of time, the insurance company typically would pay the death benefit to the insured’s beneficiary. Term life insurance is normally set for a 10 to 30 year duration. After the term is over, normally, the policy would expire, and the insured would cease to pay premiums and the insurance company would no longer be responsible for paying a death benefit. However, some insurance companies may offer options to renew a term life policy or convert to a whole life policy.

As an alternative to term life, there are also whole life policies. Whole life insurance policies are permanent life insurance policies, meaning that as long as the insured pays their premiums on time until the time they pass away, their insurance company will pay the death benefit to the insured’s beneficiary. An added benefit to whole life insurance is that it builds cash value, meaning that the insured can utilize it as a financial tool to borrow against or withdraw from.

When Should I Get Life Insurance?

Premiums for life insurance are based on a variety of factors including but not limited to the age, health, gender, occupation, and lifestyle choices of the insured. The younger and healthier an individual is, the cheaper their insurance policy will generally be. As an individual ages, the premiums will usually increase. Therefore, the cheapest time to open an insurance policy is when you are young. However, there is never a bad time to start planning for your family. Since life insurance is based on a variety of factors, the best way to find out what type of policy works for you is to get a quote. If you are interested in obtaining quotes for whole or term life options, contact your local Cross Insurance for more information.

Should I Join My Employer Sponsored Life Insurance Plan?

If you are interested in obtaining a life insurance policy and your employer offers an employer sponsored life insurance plan, you should discuss the plan and enrollment with your employer. Employer sponsored life insurance plans are often cheaper than individual life insurance policies as they are rated based on a group of people rather than one individual. Employer sponsored life insurance policies can take advantage of a comparable death benefit for a cheaper group rate.  If you leave your employment, however, there is the potential that your employer sponsored life insurance policy will terminate. Whether or not you will have the option to convert your employer sponsored life insurance policy to an individual policy (and if so, how much your premiums would cost) will depend on the particular details of your employer sponsored life insurance plan.

Why Would an Insurance Company Not Pay a Death Benefit?

All life insurance policies are contracts between the insured and the insurance companies. In order to pay out, the death of the insured must meet the necessary guidelines as agreed upon at the time the contract was signed. Many insurance companies have exclusions built into their policies for certain causes of death like suicide, dying while committing an illegal act, death during active war, etc.

Requesting a Life Insurance Quote

Planning for your family’s financial future can be difficult. Utilizing life insurance policies can help take the financial burden off of your loved ones. Cross Insurance can help you explore your options when it comes to term or whole life insurance. To find out more, contact your local Cross Insurance today to request a quote for life insurance.

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This article is for general informational purposes only and is not to be relied upon or used for any particular purpose. Cross Insurance shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, insurance, accounting or other professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article are that of its author and do not necessarily represent the views of Cross Financial Corp. and its subsidiaries and affiliates (“Cross Insurance”) or Cross Insurance’s management or shareholders.