Choosing a life insurance policy can be very confusing, since there are so many different options to look into. But we can help break down what you need to consider when searching for a policy! First, you’ll need to decide between the two main types of policies: whole life insurance and term life insurance. And while term life is excellent for people on a budget, there are situations when whole life is simply a better deal. So what’s the difference between the two, and is whole life right for you?
Difference Between Term & Whole Life
Both term life and whole life require you to pay a monthly premium. In return, your family will get an agreed-upon amount of money (your death benefit) when you pass away. The major difference between these types of policies lies in the length of the policy.
When you purchase term life insurance, you will be asked to choose the amount of time that your coverage will last, typically anywhere from ten to thirty years. After that amount of time, your policy will expire. If you outlive the policy, your family will not get your death benefit. And you will then have to decide whether to buy a new policy or extend your term. In both cases, your policy will likely be more expensive because you will be older and might have developed health conditions.
The possibility that your policy will end, and you will have to extend or repurchase is a major drawback of term life. With whole life insurance, though, you might pay higher premiums. But the policy will cover you for the rest of your life. Not only that, but many whole life policies have a cash value – like a savings account – attached to the policy that accrues money over time.
As we mentioned above, whole life can be more expensive than term life. But the difference in price is often not actually all that much. And again, with a whole life insurance policy, you will build a cash value account that grows over time. And the account is tax-deferred. So you can essentially use your policy as a type of bank account.
You should also consider whole life insurance over term life if:
You’re close to 50– You might think that if you’re heading towards 50, or a little older, term life is the way to go. But if you’re only around 50, you have a good chance of outliving a term life insurance policy. And then you’d have to pay an extremely high premium to get a new policy (that might have a smaller death benefit), since you will be buying/renewing your policy at a much older age.
You have children in college– If you have a child or children in college, a whole life insurance policy with added cash value is a great option. With one of these policies, you can save that money and then give it to your child for tuition.
You’ve been diagnosed with a medical condition– If you missed the opportunity to purchase a term life insurance policy when you were young and healthy, odds are that one will be very expensive if your health is no longer what it once was. In this case, it would probably be smarter to get a guaranteed issue whole life insurance policy. Rather than run the risk of not qualifying for a standard life insurance policy later on.
You have a child with special needs– Whole life is a great choice if you are a parent who has a child with special needs and an existing special needs trust. You can consider survivorship whole life insurance. Which covers both parents but only pays the death benefit after the remaining parent passes away. This is an excellent type of permanent coverage that is a great deal more affordable than coverage for both parents.
You own a business- There are a variety of types of life insurance options available to business owners. For example, you can take out a permanent cash-value life insurance policy such as an indexed universal life policy. With which you can access funds should you need liquidity in case of an emergency. Or if the key employee leaves the company.
Whole life insurance is a great choice for a lot of people. But if you’re not sure which policy is best for you, your best bet is to compare policies from different companies. There are many great affordable life insurance options to choose from that will provide enough money for your family. The best way to find the right life insurance policy is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.
After the death of a loved one, there can often be a lot of paperwork to deal with while you are grieving. Dealing with your loved one’s insurance policy is often one of those things that need to be done, and there can sometimes be complications. For example, in some cases, a person named as a beneficiary in your loved one’s policy was no longer meant to be a beneficiary, but the policyholder never got the chance to change their policy. You should know that you can contest someone’s beneficiary status if you believe you have a valid claim (which means your position as a beneficiary can also be challenged), so it’s important to understand how to contest a beneficiary and how the dispute can affect life insurance payouts.
There can be a few reasons why a life insurance beneficiary might be contested. Essentially, anyone who believes they have a valid claim to a life insurance policy can contest the original policyholder’s choice of beneficiary. The most common situations in which a life insurance beneficiary may be contested include:
A current spouse objects to a former spouse being named as the life insurance policy’s beneficiary
Adult children believe they should be named beneficiaries of a parent’s policy, or stepchildren who were never added to the policy believe they were left out in error
Someone believes the original beneficiary designation was made under duress or undue influence
The Process of Contesting A Beneficiary
Unfortunately, if a policyholder passes away without updating their policy, they leave the people who feel they should have been named as beneficiaries a long uphill legal battle. It can take a lot of money, time, and energy to contest a beneficiary, and the final decision will be made by a court, not the life insurance company. So, the whole process can end in you not getting any money, or losing a lot of the money you are rewarded (if you win) to court and lawyer’s fees.
Avoid the Hassle
The last thing that you would want is for your loved ones to have to have a court battle with the named beneficiaries of your policy because you never had the chance or forgot to change your policy. Ensure that your loved ones receive the financial support they need by reviewing your policy on a yearly basis, to make sure that everything is accurate.
Another thing that you can do is make sure there is enough coverage for your loved ones. To make sure you have enough coverage, you can add riders to your policy for additional coverage, or you can search for a new life insurance policy – you might find that you can get one that is better and more affordable.
If you need help reviewing your policy or deciding on a policy, consider using online tools to see what is available, as well as working with an agent who will help you compare plans and see which is the right fit for you. To get you started, we have provided the top insurance companies that offer life insurance policies below; each can give you hassle-free assistance and the most competitive rates in the nation. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.
More than likely, you have a bunch of contracts that you allow to renew each year, like your cell phone bill, car insurance, internet, etc. and you don’t even think twice about it. Sometimes it’s just easier to allow things to renew without reviewing them, or maybe you just simply forget about reviewing all of these contracts before they renew. This might be especially true for your life insurance policy: odds are you’ve probably only reviewed it once or twice within the first year or two of having it. But as your life changes, there may be times when your financial needs change, so it is recommended that you review your life insurance policy on an annual or biannual basis to see if any of the following changes are going to impact your policy in any way.
Administrative Changes You Might Need To Make
Take a look at your life insurance policy and check if there are any administrative changes that need to be made to it, such as:
Make sure that your address is up to date on your life insurance policy before it renews.
Address or contact information changes
Have you recently moved, or have you changed your phone number or email address? It’s important to make sure that all of that information is up-to-date, so your life insurance company has a way to contact you in case there’s any change in your policy, and so that you receive your bill without any issues. If you forget to make these changes and a bill goes to your old address or you get notifications on your old cell phone number, you risk your life insurance policy lapsing.
Bank account changes
If you are like most people, you pay your bills on autopay linked to your bank account. If you forget to update this information, your premiums will not get paid, and your policy will lapse.
When you first purchase your life insurance policy, you will have to choose a beneficiary to receive your death benefit in the event of your passing. Sometimes things change: for example, if you and your spouse get divorced, you will want to change your life insurance beneficiary to your children or someone else, to ensure that the proper person receives your death benefit.
Policy Changes You Might Need To Make
When it comes to your policy, you might decide at some point that you need more coverage or less coverage. The life changes that could trigger a change include:
Change in income
Whether you have an increase in your income or a decrease in your income, it is important to take a look at your life insurance policy and make sure that it is still affordable, works for you, and will provide enough coverage for your family. If you do get a raise in your income, your expenses will likely go up as well, so you’ll need to make sure that your coverage will meet these added expenses when you pass.
If you grow your family, you will have more financial responsibilities and should consider increasing your coverage to provide financial stability for your child as they grow, especially if you want to help with college when they are older.
Health improvements
If you bought a life insurance policy when your health was not at its greatest, your rates could be high because of your health conditions. But if your health gets better over time, you can save money on your monthly premiums by providing proof of these improvements. For example, if you were a smoker when you first bought your policy, but later quit smoking, and keep it up for 6 months to a year, you can provide this information to your life insurance company and start saving money.
On the other hand, if your health takes a turn for the worse, you should also consider reviewing your life insurance policy. Declining health will not raise your life insurance policy rates, because once you purchase a policy, your rates are locked in. But if your health begins to deteriorate, you might want to add riders onto your policy, such as a terminal illness rider, or you might want to increase your death benefit coverage.
Reviewing your life insurance policy before it renews automatically can help you save money and ensure that your family is properly covered in the event that you are no longer around. Once you review your policy, and you come to the conclusion that you need more coverage, or would like to convert from a term life insurance policy to a permanent life insurance policy, it is important to begin researching plans to find the right one for you.
The best way to understand how life insurance works, and find the right policy for you and your specific needs, is by working with an agent who specializes in life insurance. We have provided the top life insurance companies in the nation below; each offers hassle-free assistance and the most competitive rates. Always check multiple sites to make sure you have bargaining power and know the advantages of each company. Make sure a hard time isn’t made harder by a financial burden, check life insurance rates today.
