5 things to know about life insurance
Bi County Insurance & Western Illinois Title provides life insurance in Monmouth, IL, Burlington, IA, Galesburg, Stronghurst, IL, Oquawka, IL, Biggsville and surrounding regions.
These are five key things to know about life insurance:
- Purpose and Coverage:
Financial Protection: Life insurance is designed to provide financial protection for your loved ones in the event of your death. It pays out a lump sum, known as the death benefit, to your beneficiaries.
Coverage Types: There are different types of life insurance, with the two main categories being term life insurance (provides coverage for a specific term, such as 10, 20, or 30 years) and permanent life insurance (provides coverage for your entire life and includes a cash value component).
- Premiums and Payments:
Premiums: Policyholders pay regular premiums to keep the life insurance policy active. The amount of the premium depends on factors like age, health, coverage amount, and type of policy.
Payment Structure: Premiums can be paid annually, semi-annually, quarterly, or monthly, depending on the policy and the preferences of the policyholder.
- Underwriting and Approval:
Underwriting Process: To determine the premium amount, life insurance companies assess the risk associated with insuring an individual. This process involves evaluating factors such as age, health, lifestyle, and medical history.
Medical Examination: Depending on the policy and coverage amount, a medical examination may be required. This can include a health questionnaire, blood tests, and other medical assessments.
- Policy Riders and Options:
Policy Riders: Life insurance policies often come with riders, which are optional add-ons that provide additional benefits. Common riders include accelerated death benefit riders, which allow the policyholder to access a portion of the death benefit if diagnosed with a terminal illness, and waiver of premium riders, which waive premium payments in case of disability.
Policy Options: Some permanent life insurance policies accumulate a cash value over time, which can be accessed or borrowed against during the policyholder’s lifetime.
- Review and Updating:
Regular Reviews: Life circumstances change, so it’s important to review your life insurance coverage regularly. Major life events such as marriage, the birth of a child, or a change in financial situation may necessitate adjustments to your coverage.
Beneficiary Designations: Ensure that your beneficiary designations are up-to-date. This ensures that the death benefit goes to the intended individuals or entities.
Understanding these aspects of life insurance can help you make informed decisions about the type and amount of coverage that best suits your needs and financial goals. Always consult with a financial advisor or insurance professional for personalized advice based on your specific situation. Kindly call us without any hesitation.