Life insurance, while being an incredibly beneficial resource for many people who are looking for peace of mind when it comes to what happens to their family once they are gone, can also be a confusing subject to wrap your head around. With your insurance choice being such an important and impactful decision, it is important that you get it right the first time. Interested to hear more? We have put together a list of everything you need to know about life insurance to help get you started on the right track.
You Can Sell Your Policy
If for whatever reason, your situation changes and you no longer need coverage, you do have the option to sell it for a cash payout. There are two ways to do this. The first is by surrendering your policy to the insurance provider. The second option, a life settlement, is perhaps more financially appealing. This option involves selling your insurance policy to a third party, which makes them the sole beneficiary of the payouts in exchange for an amount that is usually higher than what you would receive if you chose to surrender the policy instead. This means you can now allocate your money elsewhere, giving you more freedom when you need it the most. We recommend reviewing a guide on how to sell your life insurance policy to ensure you understand it fully before choosing it as an option.
There are Two Main Types
The first thing to know is that there are two main types: term and permanent. The first, term insurance, essentially requires you to pay premiums over a pre-determined period of time, such as 30 years, for example. If, during these 30 years, you pass away, your beneficiaries will receive a payout. If you do not, however, your beneficiaries receive nothing, your plan expires, and you will be given a choice to refresh the plan. The second type, permanent insurance, requires you to either pay in installments or to pay the entire amount in a lump sum, with the coverage lasting forever. Each option offers different benefits depending on your personal situation, so it’s worth exploring each one in depth before making a decision.
Your Beneficiaries Will Receive the Payouts
When you set up a policy, you will be asked to name a series of beneficiaries, or a single beneficiary. These will receive the cash payout when you do pass away, so it’s important to give this step plenty of consideration. You could, perhaps, use it as a way to contribute towards your funeral costs, or as a way to contribute to a family member’s expenses. Whatever the case may be, it’s important to ensure you state the correct person and update your insurance provider if anything changes.
There is Extra Help Available
This is where an insurance agent comes in. Essentially, their job is to ensure you find a policy that benefits you and your family the most. Normally, they will present you with a series of options and allow you to make the final decision after explaining the pros and cons of each one. For anyone who does not have the time to invest into research or is finding that understanding different policies is too much to get their head around, an insurance agent represents a powerful tool.