Life insurance is one of those things that everyone talks about, yet it is easy to feel like nobody is really talking about it. Your family and friends might mention that they have it, but often the conversation stops there. Since many people who take out a life insurance policy are doing so as a precaution and not amid a crisis, it can feel secondary to facts of life that are more important.
The truth is though, that not only is life insurance just as important of a piece of your plan as retirement savings, or money management, it is also just as layered. Once you have acknowledged your desire to add a life insurance policy to your plate, dedicate some time to researching your options. This is just as much of an investment in your future as your families, and the benefits and peace of mind you will experience once you have all your ducks in a row can relieve some pressure and allow you to focus on living your life to the fullest.
Life insurance is designed to either last for a period (term) or a lifetime (whole life, universal life.) Term life insurance will come with an established number of years before it expires. Should you die before the term is up, the set amount of money, known as the death benefit, is paid out to your designated beneficiary. This style policy is both the simplest, and most accessible.
On the other hand, whole life insurance is designed to last exactly as it sounds, for your whole life. A whole life plan will have a death benefit as well as a cash value, which acts as an investment-like, tax deferred savings account that is included in the policy. Whole life insurance can cost significantly more than term life and is mostly geared to benefit those who need the cash value to cover things like estate plans, or who might be leaving behind long-term dependents such as a child with a disability.
With dozens of insurers competing for your business, determining which provider is right for you is crucial. While it may be tempting to make your selection based on price alone, ignoring the other details as well, would be a mistake. One huge reason to be diligent in your selection is because unfortunately it is not uncommon to experience a situation where once the policy has been fully underwritten, you might receive a final price quote that is higher than what you expected to pay.
The credibility of the company that you choose is especially important as well. Since you will be a customer of theirs over an extended period and be dedicating a substantial amount of your own money into their services you will want to make sure that the company you select has a track record of being able to weather the ups and downs of the economy and financial markets.
It might seem counterintuitive to think about cancelling or selling your life insurance policy, before you even take one out, but part of being an educated consumer is thinking the process all the way through. Selling a life insurance policy for cash is a common practice and some reasons to explore this would be, funding your retirement, if you can no longer afford the policy payments and risk losing it all together, or if you become chronically or critically ill and you either cannot access the death benefit early, or that amount is less than what you could sell your policy for.
Luckily, there are many resources available to help you understand the ins and outs of selling a life insurance policy. Same as taking one out, if you go to sell it one day, you will want to ensure that you are making decisions that are in your own best interest and suit your personal goals and motivations for doing so. You can review a guide that tells you everything you need to know about how to sell your term life insurance policy. One major takeaway of selling is recognizing that once it is sold, the buyer pays the remainder of premiums, and when you pass away, they will be the ones to receive the death benefit from your policy.
Although it may seem obvious, the fact that adding a life insurance policy to your budget will impact the rest of your finances deserves to be reiterated. Since this will be an investment that needs to be maintained and contributed to over an extended period, consulting your financial planner before making your final decision is wise. These professionals can also help by explaining any portion of the policy of choice that remains unclear to you, and since you already have an established trust with this person or team, you can be assured in their guidance.