Life Insurance

4 Things You Should Know About Life Insurance

Know Life Insurance Terminology Before Getting Started

When purchasing life insurance, your agent may introduce you to terminology that you are not familiar with but a good agent will clearly explain the terms and insurance process to help get you the best coverage possible for you and your family. There are many important elements to a life insurance policy, the following are four important aspects of insurance you should consider before finding a qualified agent to help you navigate the process of acquiring life insurance.

One: Does Life Insurance Cover Deaths from Coronavirus?

Life insurance policies will probably pay out for COVID-19 deaths, although there are a few exceptions, according to representatives from life insurance companies and industry organizations, so ask a competent agent about potential exceptions, just to make sure. There are however, claims floating around the internet on social media websites that if you receive the COVID-19 vaccine and die, insurance companies will not pay out on the policy because the vaccine is experimental but the fact is most life insurance policies have not changed because of the COVID-19 vaccination. According to the American Council of Life Insurers getting the shot will not impact whether a policy pays out in the event of death. The American Council of Life Insurers released a press release debunking the erroneous information after receiving a flood of calls asking about the false claims being shared across Twitter, Facebook and Tik Tok about death benefits. In the press release, the American Council of Life Insurers explained that the vaccine does not change whether a policyholder receives their benefit. Jan Graeber, a senior health actuary at the American Council of Life Insurers said, “Life insurance is pretty straight forward, it pays from death.”

Two: When You Purchase Life Insurance You Enter into a Contract

Simply put, if you decide to purchase life insurance, you will agree to enter into a contract between yourself, legally known as the policyholder, and the insurer, legally known as the insurance company. Basically, when you purchase a life insurance policy it means that you will agree to pay a premium and the insurer will agree to pay out a lump sum benefit when you pass away. To put it simply, the insurer contractually agrees to pay a lump sum payout of money in exchange for a premium to your designated beneficiary, whoever that may be, as stated in your policy, in the event of your death, which unfortunately for everyone, like taxes, is a certainty in life.

Three: Choose a Life Insurance Policy That Best Fits Your Needs

Basically, there are three types of life insurance policies, term, whole and universal. There are also various riders that can be underwritten as add-ons to your policy. The intricacies of this process are more complex than can be described in this article. Therefore, the professionals at recommend consulting with an agent who can provide you with clear information about the nitty-gritty details of life insurance contracts and riders that best fit your individual situation. Briefly, term insurance is the most popular because term policies are what is referred to as decreasing term and the premiums are usually lower than those of other policy types. Whole Life Insurance provides what is called a Living Benefit, which means you don’t have to die to collect the money. Your premium payments will start to build cash value in the policy for which you are able to access when needed through a policy loan. Also, the death benefit stays consistent, it doesn’t decrease like term life, therefore if you die today or 20 years from now, your whole life policy will pay the same amount minus any policy loan amounts to your beneficiary. Finally, Universal Life is a very flexible policy that can provide a death benefit as well as a living benefit. The Universal Life policy builds cash value by taking part of your premium and applying it to the death benefit and using part of the premium for savings and investment.

Four: The Longer You Wait to Purchase Life Insurance the Higher the Cost.

Last but not least, as you age your premiums will be higher because with each year added to your life you come closer to death, therefore, life insurance costs go up as we age. Insurers have access to data regarding the age at which people die. Insurers can also forecast potential causes of death. This information enables insurers to predict the average age of a man or woman at death. In conclusion, when buying life insurance, take advantage of lower premiums when you are younger.

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