We know it’s hard to think about your child’s death; after all, every parent hopes their children will have a long, healthy life. So, it’s understandable if buying life insurance for your kids doesn’t seem like a priority. However, as a parent you have to constantly prepare for the unexpected. Buying life insurance is typically a smart financial move, but is it necessary for a child?
What is Child Life Insurance
Child life insurance can be bought by a parent, guardian, or grandparent to protect the child’s or guardian’s financial security. Child life insurance works the same as adult life insurance. You pay a premium and when the covered person passes their beneficiaries receive a payout. However, coverage options for kids are much more limited than they are for adults. Adults can choose from a variety of plans including term, whole, universal etc. Child life insurance policies only come as a whole life policy. Meaning as long as you keep up on the premiums the policy will last for the child’s entire life. Having a whole life policy also means the premiums are fixed so they will never go up.
There is also the added benefit of a cash value with a whole life policy. This is the savings component of a life insurance policy where a portion of the premium is set aside and earns interest over time. However, for child life insurance the coverage amount is typically under $50,000. Once your child is a certain age, typically between 18-21, they can take over the policy for themselves. And decide if they want to keep it, increase their coverage, or drop it completely. So essentially you’re giving your child a head start on protecting their own families when they eventually pass.
Child Rider Vs. Child Life Insurance
Child life insurance and child riders are often confused, but they are not the same. With child life insurance it’s a separate contract that covers the risk of death of a child. When the child passes the family receives a death benefit. Child riders are add-ons that you can choose to add to your own life insurance. They are tied to a parent’s policy rather than being a standalone policy. If a child on a child-rider dies, you get a small payout. If all you’re looking for is peace of mind in case the worst happens, a child rider may be a better choice than a child life insurance policy on its own. Child riders offer:
Straightforward protection – A child rider gives security for your child without the complicated investing part of a child policy.
Conversion options – If your child needs coverage for the rest of his or her life, you can change a child rider into a permanent insurance in the future.
Affordability – A child rider costs significantly less than a full life insurance policy for a child. Every $1,000 of coverage typically costs about $5 per year. So, a $10,000 child rider might cost you $50 more per year.
Benefits of Child Life Insurance
If you’re debating whether or not to buy a policy for your child and aren’t sure what to look for, here are some of the benefits of a policy.
Future insurability – Most child life insurance policies come with or offer a guaranteed purchase option. That means the child can buy additional coverage once they are an adult without having to take a medical exam. This can be especially helpful if your child gets a long-term illness like diabetes or decides to have a dangerous career. Most people with health problems or hazardous jobs have to pay a lot more for life insurance than the average person.
Savings – You can take money out of the cash value account or take out a loan from it. Then your child turns 18, they have the option to drop the policy and receive the full cash value. The money can help for things like college tuition, a car, or down payments on their first home. The account is also tax-deferred if you don’t have to pay taxes on the interest until the money is taken out.
Worst case scenario coverage – Losing a child is very painful, and leads you to having unexpected costs in your worst moment. As long as the premiums are paid the policy will pay out a lump sum if it happens. The money can be used to cover things like a funeral or grief counseling. It can also help cover your bills so you can take off work while you’re grieving.
Disadvantages of Child Life Insurance
Generally, they are not a smart financial investment. While in the benefits list we mentioned insurance companies sell life insurance for kids as a way to save for your child’s future with the cash value, these types of policies can have higher fees and less growth than a separate investing account. We also noted that since rates go up as you get older, getting a policy when your child is young can give them coverage when they are older. Even though life insurance rates do go up between 4.5% and 9% every year, it’s rare that a child won’t be able to get a cheap policy as a young adult. The only time this isn’t true is if your child has a disability or illness that will last their whole life and make it hard for them to get cheap term life insurance when they’re older.
Another benefit is that a full policy for a child is a great investment, but this is sometimes not the case. Even though the cash value of a whole policy makes interest at a rate set by your insurance company, often with a guaranteed minimum, it is too expensive for the average person to buy a whole policy. This is because whole life insurance costs a lot more than term insurance. Over the course of your child’s life, you may not be able to keep paying those fees. Whether or not you should get child life insurance entirely depends on your family’s specific situation. Where one child may benefit because they have a chronic illness, another might not actually get too much from it because they’re healthy and able to get a completely affordable plan as a young adult.
Do I Need Child Life Insurance?
Before you buy coverage for your kids, you should look at your budget and think about your own life insurance needs. In general, your own life insurance is more important than your child’s because it can help pay for your family’s living costs or other costs if you die. Here are times when getting a policy for your child might be a good idea:
Your child makes a lot of money as an actor, model, or social media star.
Your teenager is working part-time to help pay for things around the house.
Your child takes care of their younger siblings and gives you the kind of help you would have to hire someone else to do otherwise.
Beyond that, you don’t need to protect your child’s ability to get insurance unless you have a family background of serious health problems that start young or a child with a disability. When it comes to locking in premiums, most adults in their 20s and 30s don’t have any trouble getting reasonable coverage. If you need to protect your child’s life, it’s easier and less expensive to add a child rider to your term policy. Riders are add-ons that can give your policy extra coverage. You could also choose this choice if you want to pay for a funeral in case the worst happens.
Alternatives
Don’t worry if you’re not sure about child life insurance or if you decide it’s not for you. There is still a way to protect your child’s financial future and help them get off to a good start when they become adults. Savings plans are a more straightforward option for saving money for your kids. You can put the money you would have spent on the life insurance into traditional savings accounts, such as:
529 savings plan – These plans are tax-advantaged accounts offered by the government. There are two kinds of 529 accounts: prepaid tuition plans and educational savings plans. Both can only be used to pay for higher education costs, and qualifying withdrawals are tax-free.
Custodial accounts – Parents can save and invest in a custodial account kept in the name of their child, such as a UTMA (Uniform Transfers to Minors Act) or UGMA (Universal Gifts to Minors Act) account, to build up savings for their child. Parents or guardians take care of custodial accounts and give them to the child when they turn 18 or 21.
IRA – If your child works and makes money, you can set up an IRA savings account for them and match their earnings to get them started for retirement savings.
Let EZ Help
Since child life insurance is so dependent on your circumstances your best bet is to speak with an agent. Everyone has their own needs, goals, and ways they can spend their money. At EZ.Insure, we know that you and your family want the best protection, but we also know you have to stay within your means. So, we will do everything we can to help you decide as well as find you the best policy at the best price.
We want to make it as easy as possible for you to do so! We’re here to help, and the best part is that everything we do is free. We will help you with everything, from answering all of your questions to helping you choose a policy and finish the registration process. We will also help you after your plan has begun. To get started, just type your zip code into the bar below or give us a call at 877-670-3560.
A term life insurance policy is great for you and your family if you need life insurance, but only want it for a certain amount of time, like while you are paying off your mortgage. You buy this kind of coverage to protect you for a certain amount of time that you choose. You can also choose from different kinds of term life insurance. For example, you can choose a level term policy, which may cost a little less than other policies because you have to pass a medical exam to apply for it.
If you are worried about your health, you can look into a term life insurance policy that doesn’t require a medical test. You can also add extra coverage to your insurance by getting “riders.” However, what happens once the term ends? What should you do if you have new debt and your policy is ending? No matter what, when your term life insurance policy ends, you have a few choices.
Examine Your Needs
If your term life policy is coming to an end, the first thing you need to do is decide if you need more life insurance. Your debts may be gone or at least smaller, but you should think about whether you have any new duties, such as helping your children pay for college or taking out more loans. Think about whether you want to leave your family a little extra money when you die, or if you want to leave your spouse a retirement fund. Also, ask yourself if your family will be okay if you die suddenly and they lose your source of income. Will they be able to pay for your funeral, which can cost around $10,000 on average?
Your Options
Renew Your Policy
Your insurance doesn’t have to end at the end of your term because you can renew it. However, you should know that doing so will probably mean paying more in premiums because your premiums will be based on your current age and the results of a new medical exam. This choice is probably best for people who only need a couple-year extension.
Drop Your Policy
If you’ve paid off your debts and have enough money saved for retirement and costs related to your death, you probably don’t need life insurance longer. You can choose not to pay the renewing fee and let your insurance company know that you’re happy to let the policy end.
Convert Your Policy
If your health isn’t great and you don’t want to get a term life insurance policy that requires a medical test, you can change your current policy to permanent life insurance. If you convert it, you’ll pay more than you were paying for your current term life policy, but you can control the cost by buying a smaller policy. This choice will work for you if you don’t need as much coverage, such as if you’ve paid off most of your debts.
Many term life insurance plans include a term conversion rider that lets you change your policy to a permanent policy before the term ends. Permanent life insurance, on the other hand, is generally much more expensive than term life insurance. Think about switching to a permanent policy only if your health has gotten so bad that you can no longer get standard coverage and you only want a permanent policy, like final expense insurance. This kind of coverage doesn’t require a medical test and pays out a small amount to pay for things like a funeral or medical bills at the end of life. If you decide to use the term “conversion rider,” you’ll need to make this change while your policy is still in effect. Start the process no later than the last year of your term.
Buy a Brand New Policy
If you want to still have life insurance but don’t necessarily want to renew your current policy you can choose a new term life insurance policy with a different company. This is best if you’re still in good health because you will have to start the process over with a medical exam. Keep in mind your rates will be higher now that you’re older, and any new health problems that have come up since you first bought your original policy will also affect how much your premium will be.
When you buy a new term life insurance, you can choose a coverage amount and term length that fit your current needs. For example, if you have nine years left on your mortgage, a 10-year policy might make sense. And you don’t have to buy a new term policy; you can choose from a number of other types of life insurance. If you want to go this route, the best way to find a policy with the benefits you want at a price you can afford is to compare all life insurance policies from different companies in your area.
FAQ
Can I get benefits from a term policy if I’m still alive?
Term life insurance isn’t structured with a cash value, so it’s not meant to give you a return on your money. Instead, it gives you peace of mind about your money. One of the reasons term life insurance is so cheap is that it only pays out money if you pass away. Most term policies work the same way as other types of insurance such as health or car insurance. For example, even if you were a great driver, your car insurance wouldn’t give you any money back. There are, however, two situations where you can get money from your term policy while you’re living.
A Return of premium life insurance is a term life insurance policy that will give you back some of the money you paid in premiums if you outlive your policy. These policies can be two or three times more expensive than a regular term life insurance policy though. Most people would be better off putting the difference in payments away or investing it. The other option is a living-benefits rider. This is a rider you can add to your term life insurance policy when you originally sign up. Your premiums will again be higher but if you have a critical or terminal illness you can withdraw from your death benefit to pay your medical bills. This choice is typically used for end-of-life care, but keep in mind it will lower the death benefit your beneficiaries will receive after you pass away.
Can I Just Cancel My Policy?
When you cancel a term life insurance, most of the time your coverage ends, and you don’t get any of your premiums or benefits back. There are no termination fees for term life insurance. You don’t have to pay anything extra if you decide to stop your service. The only other way to get a refund when you cancel traditional term life insurance is to do it during the “free look” time, which is usually 10 to 30 days after your coverage started. Your policy papers will tell you how long you have to look at the policy for free.
How Long Should My Term Policy Last?
Think about how long you will have your current financial obligations and use that as a guide to figure out how long your life insurance policy should be in effect. You should choose a term length that is long enough to cover all of your big financial obligations, but not so long that you end up paying for safety you don’t need.
For example, if you have a 20-year debt such as a mortgage, you have to pay it back over that time. To cover your mortgage payments, you should look for an insurance with a term of at least 20 years. If you have kids, you should think about how many years it will take for them to be able to support themselves financially, as well as how much money you will need to pay for their needs.
Need Help?
While all of this information is helpful, it can be a little overwhelming to sort through when you’re trying to choose what to do. Everyone has different wants, priorities, and limits on how much money they can spend. We at EZ know that you want the best security for you and your family without having to spend a lot of money. We work hard to make it as easy as possible for you to buy insurance. Our staff is always ready to help you and all of the things we offer are free. We can help you with anything, from answering the most basic questions to helping you choose insurance. Our agents can also help you with the sign-up process, and any help you need after that is free of charge. To get started, just type your zip code in the box below or call us at 877-670-3560.
There are many aspects of life that are beyond our control, most of all being when it will end. Even though you have no control over that. You can take steps to ensure that your family is not put in a financially precarious situation when the time comes. It’s time to look into purchasing life insurance. And once you start searching, you will notice that there are many different kinds of policies available. The first thing you have to decide between is if you want temporary (term) or permanent life insurance (whole life). Most people have trouble deciding which one is a better fit for them. Some even end up switching from one to another. To start you need to understand the fundamentals of each, including the pros and cons. Below we’ll look at each policy and then compare them for you.
Term Life Insurance
Term life insurance is the more affordable of the two, because unlike whole life insurance, it does not last forever. You have the ability to choose how long you want to be insured when you purchase this kind of policy. The length of time (known as the term) can typically range anywhere from 10 to 30 years. But there are companies who offer shorter or longer terms as well.
Your beneficiary will only receive the face value of the policy from your estate. And there is no cash value that can be withdrawn from the policy before you’ve passed away. This is one of the primary differences between your two options. People who want to be covered for a set amount of time, such as while they are still making payments on their mortgage or other loans, are the best candidates for this kind of insurance policy. Additionally, if needed, you can convert your term policy to a whole life policy.
Types Of Term Life Insurance
There are several types of these policies. Below we’ve highlighted a little bit of each of them to give you an idea of how term life insurance works.
Level term
This type of term life insurance policy is the most common type and is often the type people choose. The reason for its popularity is simple. Both the death benefit and the premium are set when you purchase your policy. Meaning they don’t change during the entire term. You’ll never suddenly have to pay more a month or suddenly have a smaller death benefit. Making this type straightforward and easy to manage and afford.
Annual renewable
Coverage under an annual renewable life insurance will last for 1 year. You are able to renew your policy every year however, the premium will rise each year due to your age. This type of policy is best for meeting short-term needs for life insurance coverage. This is because the policy will eventually become expensive the longer you have it. If you want a longer coverage it’s more beneficial to choose a different option.
Increasing term
With these policies your death benefit will increase at a steady predetermined rate over the length of your term. For example, your health benefit could increase by 5% every year. Meaning over the course of your term your coverage becomes more valuable. However, increasing benefits typically means increasing premiums.
Decreasing term
This policy is the exact opposite of an increasing term policy. With these your death benefit will decrease over your term but your premiums will remain the same. But why would anyone want a smaller death benefit? Great question, this type of policy is typically meant for someone who wants to make sure a specific loan or debt is covered once they pass. For example say you have a large mortgage and you want to make sure it’s paid off for your family if you pass away. As you pay off your mortgage while you’re alive the death benefits decrease, matching the loan amount. That way when you pass the amount your family would need to finish off the loan will be available to them. This ensures they can remain in their home and not have extra stress of worrying on top of their grief.
Return-of-premium
Return-of-premium life insurance, also referred to as ROP insurance, is a type of term life insurance that will return your payments in the event that you outlive your coverage. The premiums for ROP policies are significantly higher compared to those of other term life insurance types. On the other hand, you may find that the possibility of having your premiums returned to you is a valuable feature of this kind of insurance policy.
Whole Life Insurance
Whole life insurance is a life insurance that will remain in effect for your whole life. Because of this, the cost of this policy is significantly higher than the cost of term life insurance. These policies come with a cash value that makes these policies an investment as well as provide protection. You can borrow money or take money out of the cash value of your policy whenever you need and a portion of your premium payment is always added to the cash value of your policy. If you pay your premiums in accordance with the guidelines set forth by the government, you will be able to withdraw tax-free the majority or all of what has accumulated in your account.
Types Of Whole Life Insurance
Just like with term life insurance, there is an array of options available to policyholders when it comes to whole life insurance. This gives you the ability to select the precise coverage you require along with the benefits you desire:
Indexed
A type of permanent life insurance that includes a cash value, which earns interest based on an investment index chosen by your insurer. For the vast majority of individuals, purchasing indexed whole life insurance is not the most prudent financial decision. It is possible that your cash value will grow faster than it would under a traditional whole life policy. However, this rate will be lower than what you would receive from a savings or checking account. The minimum rate of return on your cash value is determined by your provider and the majority will also determine your earnings’ maximum rate of return. In addition, these policies may not be the best option because cash value accounts incur fees, whereas traditional savings accounts do not.
Modified
The initial payments for a modified whole life policy, also known as a modified premium whole life policy, are affordable. After the initial payment period (2 to 5 years) finishes, the premium will increase once and then remain constant for the remainder of the policy’s term. Rather than waiting until you’re older to purchase coverage, you can obtain a higher death benefit sooner by purchasing a modified premium policy. Even if you cannot currently afford the higher premiums but are confident that you will be able to in a few years. During your initial payment period, it may not be possible to add to the cash value.
Simplified issue
Simplified issue whole life insurance is a permanent form of life insurance. Therefore, you are covered for the duration of your life. However, its coverage is less extensive and it is restricted to those aged 45 and older. If you apply for this type of policy, you will not need to undergo a medical exam. Instead, you will be asked a few health-related questions. Insurers will charge you a higher premium for a lesser coverage amount with this policy because the health evaluation is not as thorough. The expedited application process will result in almost immediate coverage. However, you should be aware that even with simplified issue policies, there are still conditions that can prevent you from acquiring coverage.
Guaranteed issue
Guaranteed issue life insurance does not require any type of medical underwriting. In other words, neither a medical exam nor questions about your medical history will be required. There is a catch -this type of life insurance requires you to pay a higher premium in exchange for a smaller death benefit. In addition, after purchasing this type of policy, you will be subject to a waiting period. During which death benefits will not be paid out.
In addition, you will not be covered if you die from certain causes (such as suicide) in the first few years after purchasing the policy. This doesn’t mean that guaranteed issue policies have no value. Due to the guaranteed issue nature of these policies, they can be a lifeline if you are over a certain age or have health issues that make traditional insurance policies unaffordable. In most cases, however, the maximum coverage amount for these policies is $25,000.
The Differences
Both term and permanent life insurance require a monthly premium payment. In exchange, your beneficiaries will receive a predetermined amount of money (your death benefit) upon your passing. The length of the policy is the primary distinction between these types of insurance.
When purchasing term life insurance, you will be required to choose the duration of your coverage, typically between ten and thirty years. Your policy will terminate at the end of that period. If you outlive your policy, your beneficiaries will not receive any death benefits. You will then be required to decide whether to purchase a new policy or extend your current one. In both scenarios, your premiums will likely increase because you will be older and may have developed health problems.
A major disadvantage of term life insurance is the possibility that your policy will expire and you will have to extend or repurchase it. However, with whole life insurance, you may pay higher premiums, but the policy covers you for the remainder of your life. In addition, many whole life policies have a cash value – similar to a savings account – that accumulates money over time.
Which Is Best For You?
When selecting the life insurance policy that best meets your requirements, you must consider your assets, loans, budget, and desired duration of coverage. Do you want to ensure that expenses such as mortgage payments and college tuition for your children are covered? Then a term plan is an excellent and inexpensive option. Do you want to accumulate a cash value that you can borrow against and that your family can use when you die? Then your whole life will function better for you.
The premiums for both whole life insurance and term life insurance are fixed for the duration of the policy. But whole life insurance is more expensive because it remains in effect until death. Whereas term life insurance expires after a set period of time. If you are on a tight budget, you should purchase term life insurance, but if you want to build cash value or have long-term dependents, you should purchase whole life insurance.
We recommend consulting with a licensed agent before selecting a life insurance policy. They will be able to discuss your options and determine the best plan for your requirements. Don’t wait until you need life insurance to compare rates from the listed, highly-regarded insurance providers. Always check multiple sites to ensure that you have negotiating power and that you are aware of the unique benefits of each company. Ensure that a difficult time for your loved ones will not be exacerbated by a financial burden by comparing life insurance rates today. Start comparing today by entering your zip code in the box below or giving us a call at 877-670-3560.
Life insurance is one of those things that you know is a good idea but is also easy to forget about or put on the back burner. Having a policy is a necessity, though, for everyone from those who are just starting out in life to retirees – it’s just that your needs are different. But exactly which group or life stage needs it the most?
The Need for Life Insurance
When it comes down to it, it’s not about your age when it comes to life insurance. It’s about who is in your life. If you have a spouse or partner, children, or a business partner, you are in the group of people that has the biggest need for life insurance.
As we already said above, life insurance is a necessity no matter what stage of life you’re in. But this is especially true if you have anyone who relies on you financially. Even if you think you don’t need a policy because you’re young and healthy, or if you don’t think that the cost is worth it, you need to consider the financial consequences of your death on your family. They have to pay for your funeral services, your debts, and any other bills that they relied on you for.
And what if you’re older and retired with grown children, but a partner still living? You’ll still be in the group that has a high need for coverage. Remember, your partner will still have expenses after you are gone, including your final expenses and any medical debts that you leave behind.
Your loved ones can use the proceeds from a life insurance policy in a variety of ways, including:
Covering funeral and burial expenses
Paying off any outstanding debts owed by your estate
Creating a supplemental source of income for your loved ones
Helping with college expenses for children or grandchildren
Providing a nest egg of savings for a spouse’s financial needs
Types Of Life Insurance
It’s clear that anyone who has someone who relies on them financially is in serious need of life insurance, but the type of policy that is best for your life stage or situation will vary. You should look into the following types of policies:
A whole life insurance policy remains in effect for the entire life of the policyholder, as long as you keep up with the premiums payments. With this type of policy, premiums will remain the same throughout the life of the policy and will not increase for any reason. One of the best things about this type of policy is that it has a cash value component. Meaning your policy will build tax-deferred cash over time at a guaranteed rate of interest.
Whole life insurance is best for people who want a longer policy with a cash value that they can borrow from. So one of these policies might be right for you if you’re younger and have children who will one day go to college, since you can borrow money from your policy. Be aware that you must undergo a medical exam to qualify for a whole life policy, and that these policies are more expensive than term-life policies.
Term life insurance is one of the most affordable types available. But these policies only cover you for a limited period of time (or term), generally anywhere between 5-30 years. This type of policy is best for people who want affordable coverage for large expenses such as mortgage payments, college tuition, and other debts, usually those who are younger or middle-aged and want to be able to replace income in case of an unexpected death. One of the great things about term life is you can convert your policy to permanent life insurance before it expires without having to go through medical underwriting again.
Final expense insurance is generally bought to cover funeral expenses, burial expenses, and any other medical debts you may have. There is no medical exam required, and it is relatively affordable, but the death benefits are usually capped at $35,000. These policies are great for older people or those in poorer health, who might have difficulty getting another type of policy, but still want something to help their loved ones cover their final expenses.
Joint life insurance will provide coverage for both you and your partner. You can choose from a universal or whole life policy. But the death benefit is usually not paid out until both policyholders have passed away. A lot of couples will choose this option because it is cheaper than purchasing two separate policies. And the underwriting and rates are based on the younger and healthier partner.
How Much Coverage Do You Need?
To determine how much coverage you need, you’ll have to take into consideration two major factors:
Income replacement – Decide how many years of income you would like to replace for your family, then take that number and multiply it by your annual income.
What will need to be paid off – Add up all the debt that you currently have, including mortgages, credit card debt, bank loans, and any other debt. Once you’ve calculated that amount, add it to the income replacement amount.
Looking For A Life Insurance Policy?
Whether you are young or old, it’s important to consider life insurance to protect your loved ones and your assets. And it doesn’t matter if you are in your 20s or 50s. There are many great affordable policies to choose from that will provide enough money for your family. The best way to find the right life insurance 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.
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.
So you’ve finally decided to get a life insurance policy? Good choice! But now that you’ve applied for a policy, are you worried about the time it will take for your policy to go into effect? Don’t worry, you do have an option for immediate coverage: temporary life insurance. Find out how much it costs, how it works, and if it will work with the kind of coverage you’re looking into.
What Is Temporary Life Insurance?
While waiting for your life insurance policy to kick in, you have the option of buying temporary life insurance.
In some cases, it can take 4 to 6 weeks for you to be approved for an underwritten life insurance policy; your policy won’t go into effect until you’re approved and make your first premium payment. But you do have an option for that interim period: your insurer will ask you if you would like to purchase temporary life insurance. Having one will mean that you will have insurance coverage throughout the underwriting process.
The maximum amount of coverage that you can get depends on the life insurance company that you work with, but generally, you will be able to purchase up to $500,000 of temporary life insurance coverage.
How Do You Get Temporary Life Insurance?
If you want to get temporary life insurance while you are waiting for your coverage to begin, you will need to complete an additional step in your application process, and get a receipt. Your insurer will provide you with their explanation of coverage, as well as when your temporary life insurance will begin and end.
How Long Does a Policy Last?
If you choose to request temporary life insurance coverage during your underwriting process, the temporary coverage will end:
If you are denied life insurance
If your application is approved, once your policy is issued and your coverage has begun
5 days after you end your life insurance coverage, or request a premium refund
A specific day stated on your temporary insurance agreement, which is usually somewhere between 60 and 90 days after you have applied for life insurance
Do You Qualify For Temporary Life Insurance?
While temporary life insurance coverage does not require the extensive underwriting process that a more permanent policy does, you will still need to qualify by answering some basic questions. In order to qualify for temporary life insurance, you’ll most likely have to answer questions about things like your age, basic medical history, and current medical condition. But there is no need to worry – as long as you’re under the age of 70 and don’t have any major medical conditions, temporary life insurance will be available to you.
You will have a single premium payment, that will go towards your life insurance policy once it is approved.
How Much Does It Cost?
When you apply for a life insurance policy, your insurer will ask you to include the first month’s premium with your application. This premium payment will go towards your temporary life insurance; the price will be based on your initial quote, and won’t cost anything more than a single payment. If you’re approved by the insurer and accept their offer of life insurance, the payment you made for the policy will be credited toward the first month’s premium for your actual policy.
Your family has financial obligations that will not go away when you are gone; they will need your help more than ever with their expenses, and the last thing you want them to worry about is money while they are grieving. There are many great affordable life insurance options to choose from that will provide enough money for your family, for a low monthly price. The best way to find the right life insurance 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.
