What to Know Before Getting Life Insurance
Life insurance is one of those products that many of us have heard of, but few of us truly understand. At the same time, its importance cannot be overstated, whether you’re fresh out of college or already entering the twilight years of your life.
Buying life insurance is a big step, but it’s one that you’ll want to make with the right information.
Fortunately, that’s where we come in! Keep reading to learn about some key facts about life insurance, including what a policy does, how it can help, and when you’ll want to invest.
The Younger You Buy Life Insurance, The Better
If you’re in your 20s, you might feel invincible. But buying a life insurance policy when you’re young is a great way to save money.
Curious about how that works?
Well think of it this way, if you’re an insurer, you’re more likely to lose money on a 55-year-old client than a 25-year-old one. As such, policies for younger and healthier individuals tend to be much more affordable than policies for their older counterparts while still offering payment upon death.
Term vs. Whole Life
Two of the most common options when shopping for life insurance are term life insurance and whole life, which is a type of permanent life insurance.
During the former, which is typically recommended for younger people, you’re only covered for a set period; often a few years. In exchange, the premiums you’ll pay are considerably lower.
Whole life insurance is a bit more complicated and functions closer to something like a savings account. You pay into it each month and a portion goes into your policy.
One isn’t necessarily better than the other, but whole life can potentially provide greater compensation for beneficiaries. Plus, you can use the money in your account for other things such as investing in a home.
The Pay Out Policy Can Take a While
No matter which of the life insurance policies you choose, it’s worth noting that your beneficiaries won’t receive their money immediately. On the contrary, it can take months or even years before the money from a policy gets transferred.
In some extenuating circumstances, the insurance provider can even revoke or cancel a person’s policy. As an example, most policies include a suicide clause that cancels the policy should the policyholder take their own life.
The good news is that you’re not powerless in these rare cases.
You have what’s known as a life insurance contestability period. This period typically begins two years after a policyholder first buys their insurance.
During that time, the insurance company reviews the situation surrounding the policyholder’s death, as well as the information on their initial application. If they find anything that conflicts with the report, they’re free to revoke the payout.
Meanwhile, would-be beneficiaries can launch their own investigation or even take the insurance agency to court.
Invest in Your Family’s Care Today
There are no two ways about it, life insurance is complicated and often confusing. Before investing in a policy, we suggest talking with your loved ones, as well as your general care physician and an accountant who can advise you on which policy is best for you.
For more tips on taking care of yourself and your family, be sure to check out the rest of the content on our blog.