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Life Insurance 101: What, Why and How

Having the discussion about life insurance isn’t always an easy conversation to have. It is, however, a necessary one. With the proper life insurance plan, and adequate coverage, you can ensure your loved ones will be financially cared for when you pass.

What is Life Insurance?

Like other insurance plans, a life insurance policy is a signed contract with an insurance company where you pay premiums in exchange for a lump-sum payment that’s given to your beneficiaries after your death.

Though life insurance plans are generally based on the desires and demands of the insured, the three main types of insurance vary in functionality.

  • Term Life Insurance provides financial coverage for a set period of time. Individuals who want to replace lost potential income during their working years typically use this type of insurance to ensure their financial goals are met (i.e. mortgage payments, college tuition, etc.)

Term life insurance tends to be one of the cheaper options, largely because premiums are set and guaranteed for the allotted time period. After the time is expired, however, premiums tend to rise substantially in price and are not always as affordable.

  • Universal Life Insurance is designed to provide a lifetime of coverage and is typically used as a planning strategy to preserve the finances that will eventually be transferred to beneficiaries. Though universal life insurance tends to have high payments, policies have flexible premiums and coverage amounts that can be altered throughout your lifetime.
  • Whole Life Insurance provides a lifetime of permanent coverage and typically has fixed premiums. Unlike the previous two types of plans, whole life insurance has a cash value that can be utilized as a means of tax-deferred savings. Like universal life insurance, whole life is commonly used to preserve the wealth of your estate to be handed down to beneficiaries in the event of your death.

10 Reasons Why To Have Proper Life Insurance Coverage

To provide adequate financial protection for your family and dependents, having the right insurance coverage is important. Here are 10 reasons why you need life insurance and the benefits that accompany proper coverage.Expect the Unexpected

1.  Expect the Unexpected

With life insurance, you can plan ahead for the unexpected, like death caused by an accident, illness or disaster.

2.  Debt Protection

After your death, your dependents are responsible for any finances you left behind. You don’t want to leave debt for your loved ones to deal with.Funeral Expenses

3.  Funeral Expenses

The average funeral costs upwards of $7,000 and this is just for a burial ceremony. Life insurance can cover these expenses without burdening others.

4.  Retirement Savings

Life insurance can act as a personal pension plan that ensures your retirement savings last as long as you live.

5.  Financially Smart

Many policies have a cash value that can be used for a variety of things such as credit increase, loan payments, etc.

6.  Cover Your Business

Life insurance can protect your business from things like financial loss in the event you or your business partner passes away.

7.  In Case of Emergency

If you fall ill or are diagnosed with a terminal illness, life insurance provides financial support through withdraw requests or loans.

8.  Protection for Loved Ones

Life insurance provides financial security for your loved ones just as you did in your lifetime.

9.  Care for a Cause

In the event your insurance payment doesn’t go to beneficiaries, you can leave it to a cause or charity as a lasting gift.Peace of Mind

10.  Peace of Mind

Having life insurance can offer you great peace of mind, knowing you’ve planned and prepared for both the certainties and uncertainties of life.

The Planned and Unplanned Future

Though having whole and universal life insurance offers a lifetime of financial protection, term life insurance can be a different case. Having term life insurance is a great step in planning for the future, but there are several reasons why you might find yourself in need of more coverage.

  • You buy a home or refinance your mortgage
  • You fall into debt
  • You get married
  • You have children
  • You upsize your home
  • You get a promotion
  • Your family size grows
  • You get a new job
  • You get divorced
  • You become widowed
  • You retire

Getting Your Perfect Life Insurance Plan

Even with proper knowledge, navigating your way around life insurance plans can be challenging. Come to Esposito Insurance Agency to learn more about life insurance policies and what plans work best for your needs and goals. Request a free quote today.

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