Make 2020 Your Year to Buy Life Insurance
Looking to buy life insurance for the first time? Helping your adult children make smart choices in their insurance policy? Perhaps you are an experienced life insurance buyer and you want to freshen yours up? 2020 is YOUR year to take control of your life insurance policy and make it a priority! We are going to provide you with a quick refresh on the life insurance basics, and the type of options that are available.
What is life insurance and how does it protect me?
Life insurance can be defined as a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of an insured person. Essentially a life insurance policy protects your family and loved ones.
Key Life Terms To Know:
- Policy refers to the contract between you and the insurance company. This is what your payments are going towards.
- Policyholder is the person who owns the insurance policy, so if you are the person buying, you would be the policyholder.
- Premiums are the payments that you make to the insurance company. These payments can vary from monthly to semi-annual or annual. It’s important to choose the payment plan that works best for you. Premiums are often determined by your age, amount of coverage and your health. For example. if you are a smoker, your premiums will be higher versus a non smoker.
- The beneficiary is a person you choose who will receive your death benefits. You are able to choose more than one and split the benefits as you wish.
- Death benefit refers to the money that is given to the beneficiary by the insurance company when you die.
Most Common Life Insurance Options:
- Term Life Insurance: is life insurance that provides coverage at a fixed rate of payments for a limited period of time. In simpler terms, you have coverage for a specific time period (10-30 years). In most cases, these policies are less expensive than permanent life insurance since coverage is temporary.
- Permanent Life Insurance: covers you throughout your entire life, and it does offer cash value. Think of this type of policy as a “savings account”. Some policies can accrue interest over time and even pay out dividends.
Hope our blog this quarter was able to give you some insight on life insurance options for 2020! Please do not hesitate to reach out to Dave if you have any questions or need any tips picking out a policy. You can reach him via email or give our Ellicott City office a call.