Understanding Life Insurance Options and Needs

Although thinking about death and tragedy is not enjoyable, doing so to ensure adequate financial planning may be necessary. After all, if someone dies and their family and loved ones inherit financial burdens, appropriate preparations may prove crucial. Understanding, acquiring and maintaining suitable life insurance should be a top priority.

How Does Life Insurance Work?

Life policies establish contractual agreements between a policyholder and their insurance company. After selecting the details of life insurance, including the desired type of policy, any endorsements or riders and coverage limits, policyholders pay premiums to maintain coverage. As long as a policy remains active, its named beneficiaries can file a claim for a payout following the death of an insured.

What Are the Primary Types of Life Insurance?

When assessing and addressing insurance for life needs, one of the first questions people should ask themselves is what type of policy they want. While there are many subcategories and customizable details when it comes to life insurance coverage, policies generally fall into one of the following two classifications:

• Term life insurance—These policies establish a specific period of time during which coverage will remain active (e.g., 10, 20 or 30 years). Beneficiaries may receive a payout if an insured’s death occurs during this term. If a term life insurance policy expires, policyholders may be offered the opportunity to convert it into permanent life insurance; however, this may depend on the type of term plan and may not always be an option. Term policies have no cash value.
• Permanent life insurance—As their name suggests, these policies can provide ongoing coverage throughout the remainder of an insured’s lifetime, so long as premiums are paid. Additionally, permanent life insurance often includes financial opportunities, such as accruing cash value over time, which can be used to offset premiums or borrowed against.

How to Analyze Insurance For Life Needs

Everyone’s life coverage needs are unique. For example, a parent with young children and a mortgage on their new home may require greater coverage limits than an empty nester with significant retirement savings. Generally, when considering various available coverage options, consumers should thoroughly assess many factors within their lives, including the following:

• Alternative financial assets (e.g., savings, bonds and annuities)
• Age
• Occupation
• Lifestyle habits (e.g., dangerous hobbies or smoking status)
• Medical history
• Anticipated future expenses (e.g., child care and supporting dependents)
• Outstanding debts

We’re Here to Help

At Top Insurance LLC, we’re proud to have served families and individuals in the Duluth, GA area for over a decade. Reach out to one of our knowledgeable agents today to learn more about life policy options or to compare personalized quotes.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.