Is Life Insurance Worth It? A Complex Question, Answered Simply
According to the latest research, 84 percent of Americans believe that life insurance is important for most people. However, for many, that belief does not translate into action. A mere 68 percent think that it’s important for them personally, and just 59 percent own some kind of life insurance policy.
Are you part of the group of people who don’t have life insurance? If so, why not? Do you have concerns about whether it’s worth it for you on a personal level?
If you’ve been wondering “is life insurance worth it?” keep reading. Explained below is everything you need to know to answer this question for yourself.
Benefits of Life Insurance
You and your beneficiaries can enjoy quite a few advantages when you invest in a life insurance policy. Some specific benefits include the following:
Assistance Covering Expenses
A good life insurance policy can make it easier for your loved ones to cover funeral expenses after you’ve passed away. They can also use the payout to help pay back any debts you may owe.
Special Tax Treatment
Life insurance payouts receive different tax treatment than other payouts. For example, they’re often estate tax-free and income tax-free.
In general, it’s easy to make adjustments to your insurance policy over time. If you want to change the death benefit or premiums, you can usually do that without many (if any) problems.
Coverage Can Be Bundled
You can also bundle your life insurance coverage with other types of insurance coverage in many cases. This, in turn, can help you save money while still getting the peace of mind that it provides.
Types of Life Insurance
One of the first questions people ask about life insurance (after “is it worth it?” or “is life insurance good?”) is a question about the different types of life insurance. There are two main types of policies: term and whole life. Here are some key differences between them:
Term Life Insurance
Term life insurance is one of the most popular life insurance options. You may have questions like “how does term life insurance work?” and “is term life insurance worth it?”
Term life insurance works by providing you with coverage for a short period of time (usually between 10 and 30 years). If you outlive the term, your policy expires and you’ll have to buy a new one.
Term life insurance is worthwhile for many people, especially those who purchase insurance later in life, because it’s an affordable option that still gives them peace of mind.
Whole Life Insurance
Whole life insurance, as the name suggests, covers you for your whole life. In addition to the death benefit, it also has a cash value that grows over time.
Whole life insurance is much more expensive than term life insurance. However, it provides long-term coverage, and you won’t have to worry about your premium increasing as you age or as your health gets worse.
Who Should Get Life Insurance?
Anyone who wants to enjoy the benefits that life insurance has to offer should consider investing in a policy. However, there are some individuals who can benefit from a life insurance policy more than others, including those who fall into these groups:
- Those who have kids
- Those who have a mortgage or other shared debts
- Those who have co-signed debt
- Those who want to provide someone with an inheritance
- Those who are business owners
- Those who have maxed out their retirement plans but want to continue investing
- Those who have concerns about paying funeral expenses
Others can benefit from life insurance, of course. However, these people are most likely to need it.
Tips for Choosing a Life Insurance Policy
If you fall into one of the above groups and think that life insurance is worth it for you, you might be wondering where to begin when it comes to choosing a life insurance policy. Here are some things to consider before you start shopping around:
What Kind of Coverage Do I Want?
Do you want a term life insurance policy? Whole life? Whatever type of coverage you want, make sure the agency offers it before you agree to work with them.
How Stable is the Company I’m Considering?
Consider the financial stability of the insurance agency you’re working with, too. Will they still be around to provide a death benefit after you pass away?
What Kind of Rates Do They Offer?
Do their rates seem reasonable? Are they somewhat aligned with what other agencies are charging in terms of premiums and fees?
Should You Switch Life Insurance Policies?
If you already have life insurance and have decided that it’s still worth it for you, you may be wondering whether it’s ever a good idea to switch life insurance policies.
In general, the only time you might want to switch policies is if you’ve had a significant positive change in your health status. According to the article entitled, Best Guaranteed Universal Life Insurance (GUL) Companies, it is often for seniors to switch old life insurance policies because their health has deteriorated in their later years.
If you switched policies as a senior, you might end up with higher premiums if your health is worse than it was when you first purchased a policy. This is why buying a universal or whole life policy is a good option, because it guarantees you a certain rate for the rest of your life. This can help you save a lot of money later on.
So, Is Life Insurance Worth It?
The answer to the question “is life insurance worth it?” isn’t exactly an easy one. It depends on a lot of factors, including those outlined above.
Now that you understand more about the different types of life insurance, how it works, and who can benefit most from it, do you think it’s a good idea for you to purchase a policy or update your existing one? Is life insurance a good idea for you?
If you answered “yes,” or if you want to learn more about life insurance or other types of insurance, check out some of the other articles on our site today for additional information.
Information contained on this page is provided by an independent third-party content provider. Frankly and this Site make no warranties or representations in connection therewith. If you are affiliated with this page and would like it removed please contact email@example.com