Things to know about life insurance
Life insurance is a crucial financial tool that provides security and peace of mind for individuals and their families. Bi County Insurance & Western Illinois Title provides life insurance in Stronghurst, IL, Burlington, IA, Monmouth, IL, Galesburg, Oquawka, IL, Biggsville and surrounding areas.
These are some key things to know about life insurance:
- Types of Life Insurance: There are primarily two types: term life insurance and permanent life insurance. Term life offers coverage for a specific period, typically 10, 20, or 30 years, and pays a death benefit if the insured passes away during that term. Permanent life insurance, which includes whole life and universal life, provides lifelong coverage and typically accumulates cash value over time.
- Purpose: The primary purpose of life insurance is to provide financial support to beneficiaries after the policyholder’s death. This can cover living expenses, mortgage payments, education costs, and other financial obligations.
- Premiums: Policyholders pay regular premiums, which can vary based on factors like age, health, lifestyle, and the type of coverage chosen. It’s essential to choose a premium that fits within your budget.
- Beneficiaries: When purchasing life insurance, you’ll need to designate beneficiaries—individuals or entities who will receive the death benefit. It’s important to keep this information updated as life circumstances change.
- Underwriting Process: Most life insurance policies require an underwriting process, which assesses the applicant’s health and risk factors. This may involve medical exams, questionnaires, and reviewing medical histories
- Tax Implications: Generally, death benefits are not subject to income tax. However, any cash value growth in permanent policies may be taxable upon withdrawal.
- Review and Update: It’s wise to review your life insurance policy regularly, especially after major life events such as marriage, the birth of a child, or significant financial changes, to ensure it meets your current needs.
Understanding these aspects can help individuals make informed decisions about their life insurance needs and financial planning.
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