The one product I have to explain to people more than any other as an Independent Insurance Broker is Life Insurance. While for some the concept and need for life insurance may be a no brainer the details about what life insurance is and what type of life insurance you need may not be so easy. I want to try to make it as easy as possible for you to understand. Checkout FBN Insurance.
Life insurance is probably the easiest way for us to ensure that in the event of our death our financial situation for our families remains OK. This insurance is the one insurance product you, as the insured, will never see the results of on the other hand, your family will. That’s why I think so many people don’t think they need this insurance because they’re never going to be able to actually use it.
Let’s begin by what life insurance is. It is an arrangement with an insurance company that guarantees that they will pay whomever you choose a specific amount of money that you have agreed in case of your death. The person who receives the payout is usually a spouse, or children. In return you agree to pay insurance company regular premium payments. Although this is a pretty basic description of how this insurance works, I would like to take a look at the various types available.
Term-insurance is the most common form of life insurance. This is probably the most affordable form and the least confusing. Basically, you agree to pay the insurance company payment for a specified period of time and they agree to pay out a specified amount within the specified timeframe in the event of your death. The cheaper that this type of insurance is the more reliable you are. Like other types, term insurance also does not build any cash value.
The next item to look at would be lifetime insurance. This is pretty much like term insurance except it builds cash value on a tax deferred basis. This is quite popular with people who want to supplement a retirement income or plan for cost of college education. This should still be seen more as an investment than an insurance.
Universal life insurance would be next. That type of insurance is the most flexible form. Although it generates cash value like the entire life policy, it allows the policy owner to alter both the premium and the death benefit as their lifestyle changes. You will be given a certain interest rate by the insurance company and the interest rate can never fall below that limit but may be higher. As long as the policy’s cash value suffices to pay the premium, that policy will remain active whether or not you skip a payment.Other forms of life insurance like variable insurance policies are also available. The three I mentioned above are typically the most popular you’ll find.
Life insurance is a product that a lot of people either overlook because they think they don’t need it, or they plan to get around later. I believe everyone probably needs it in one form or another. As I said above the younger that you are the more affordable it will be when you start planning for this need. With the economy, life insurance rates are always small as they are today. Even if you already have a policy, it may not be a bad idea to see what’s available to add or replace it.