Life insurance, or really insurance in general, seems like a modern invention. But did you know that the earliest form of life insurance dates back to 200-300 AD in Ancient Rome and Egypt? With a nearly 2,000-year history, it's safe to say that life insurance has been a valuable asset through the years. However, only 52% of Americans reported owning a life insurance policy in 2021. With a little less than half of Americans uninsured or underinsured, we're here to tell you why life insurance is so valuable and why you should consider investing in a policy.
First of all, what is life insurance?
Life insurance provides financial protection for a person's loved ones in the event of the insured individual's death. Offered in a lump sum, these policies can be used to help cover the cost of funeral expenses, medical bills, remaining debts, and living expenses for your family. If you are the primary wage-earner of your family, this can give you and your loved ones peace of mind knowing that in the event of your passing, they are protected and their financial future is secure.
What types of life insurance policies are there?
There are five common types of life insurance policies, each one having its own benefits and conditions. Determining which one is right for you depends on your individual circumstances. Here are the types of policies you can consider:
- Term Life Insurance - This type of life insurance policy provides coverage for a determined amount of time. Whether it's for 10 or 30 years, as long as the insured pays their monthly premiums, the insurance policy will pay out if you pass away during the term. Whenever you purchase this policy, you typically lock in your monthly premium for a determined amount of time, allowing you to better budget and plan for the long-term expense.
- Whole Life Insurance - This policy is exactly how it sounds. It provides your coverage for your whole life and provides a payout regardless of when you pass away as long as you stay up-to-date on your monthly payments.
- Universal Life Insurance - Similar to a whole life insurance policy, universal life insurance protects you for your whole life with some differences. A universal policy is usually more flexible, allowing you to adjust your death benefit. In addition, your policy's interest rate isn't fixed, meaning your policy is affected based on market conditions.
- Variable Life Insurance - This type of insurance is often riskier, but could have more value in the long run, especially if you're a talented investor. This policy, like whole and universal, will pay out a death benefit in the event of your passing. However, it has a cash-value account that is invested. This account can be affected by investment performance and change over time.
- Final Expense Life Insurance - This policy is typically designed to be more affordable, paying out a smaller amount upon your death to cover things like your end-of-life care or medical expenses, funeral costs, etc. This policy is much more affordable than the other types of insurance policies because of the lower payout.
What are the additional benefits of purchasing life insurance?
In addition to protecting your loved ones and offering you peace of mind, there are additional advantages to purchasing a life insurance policy, such as estate planning, tax advantages, and investment opportunities, or the ability to borrow against your policy's cash value.
When should I purchase a policy?
Deciding when to purchase a policy depends on your circumstances and situation. Do you have loved ones that rely on your income? Do you have outstanding debts you're paying off? If so, purchasing a policy now can protect your family and ensure your debts are covered by your policy.
It's also important to consider factors such as your age, health, habits, family history, and more when deciding if it might be time to purchase a policy. Overall, it's better to be safe than sorry when it comes to life insurance, your financial stability, and your loved ones' futures.
Contact us and chat with your Mulling insurance expert to see which life insurance option is the best for you!