Permanent life insurance is an often overlooked financial planning tool, mostly because people usually do not like to think or talk about their eventual death.
However, not having a proper plan in place in when you die can leave your loved ones with an undue burden that you do not want to place on them. But how can you make sure that your final needs are taken care of 100% so that your family does not have any added stress to their lives? Read also: Is Life Insurance for Babies Really Necessary?
What is Whole Life Insurance?
You should know a bit about what this insurance is, how it works and what you can expect to encounter when applying before you decide if it is a need for your family. Permanent life insurance, which is also referred to as whole life insurance, is insurance that pays out a benefit to another person or party upon the death of the policy holder. This type of policy has no ending term, unlike other insurance policies, and stays in place until you die or if you fail to pay your premiums in a timely manner.
There are many benefits to owning a whole life policy over other life insurance products. The major one that an insurance agent will stress to you is the fact that the policy will never expire and in most cases, the insurer will not cancel the policy for any reason other then non-payment. That means even if you develop severe medical conditions or a terminal illness, the insurance company will not drop you. This benefit is the single biggest non-financial selling point for life insurance, since most people want to know they have a security net in place for their family in case of a serious illness. Read also: 5 Valuable Life Insurance Tips to Consider When Buying Insurance.
Whole life insurance provides many other benefits as well. One benefit that most policies offer is the ability to accrue a real cash value for the life insurance over time as you pay your premiums. If you would pay on a policy for 10 years, you would have a nice amount of cash value in the insurance. That cash value if there for you to borrow against in case of an emergency, and if you would die while the money is outstanding, you still get the benefit paid to your loved ones, minus the amount borrowed.
Applying for Life Insurance
In order to start the process for a life insurance policy, you will first need to request a life insurance quote online or contact a local insurance agent. Most people can complete their purchase online without the help of an agent, but some people like working with an agent if they have more complex questions. However, you may find it easier to fill out the form online without having to meet with anyone. Plus, getting an insurance quote online means you will not have to deal with a salesperson as well. Read also: Your Guide to Understanding Life Insurance Quotes for Young Adults.
Before you even apply for a policy, you should have a good idea in your head about how much life insurance you want to purchase. In the life insurance industry, there are two major types of policies: Whole, or permanent, life insurance and term life insurance. An older person who doesn’t have much debt or income to replace will probably go with a whole life policy to cover their final expenses. If you are younger, you will probably want a combo of whole and term life insurance. Term life insurance is usually cheaper and covers a lot higher amount then whole life since it is for a short term, from 10 to 30 years. However, it is not permanent, and should only be used for short term debt, like a mortgage, college and income replacement.
When applying for life insurance, you will need to fill out a medical portion. If you are terminally ill or have severe pre-existing conditions, you will probably not qualify for a policy due to the risk of insuring you. Some policies, especially larger ones, may ask for a medical exam or blood samples. Either way, be prepared for the medical portion, as insurance underwriters are very particular when it comes to insuring people.
Piece of Mind
After you get approved for a policy, it goes into affect immediately, unless otherwise specified. Some companies may offer a final needs policy for those who are in bad health but are expected to live at least five years or more. These policies pro-rate the amount of insurance benefit that will be paid out over that term in order to lower their risk while providing people with piece of mind. Read also: ABC’s of Life Insurance Dividends.
Permanent life insurance is something that you don’t want to buy, but ultimately, you need to buy it for your family. Starting a quote online is easy and non-invasive, and doing so may help you sleep better at night knowing that your family will be taken care if a tragic accident happened.
