Life insurance is a crucial financial risk management tool for anyone with dependents or considerable debt. However, many people are unaware of the ins-and-outs of this type of insurance and, as a result, too many go without coverage. To bring you up to speed, below are answers to some of the most frequently asked questions about life insurance.
FAQs About Life Insurance
Why do you need life insurance?
If you pass away unexpectedly, your dependents might not be able to support themselves adequately without help. Additionally, if you have outstanding loans or credit card debt, your creditors can come after the amount and sue your estate. This could leave your dependents to resolve your debt. Life insurance helps you prevent these scenarios and ensures your loved ones will be taken care of financially in other ways. For instance, a life insurance policy could pay for your children's college education.
What's the difference between term & permanent insurance?
Term life is temporary. It runs for a set term of years and must be renewed — often for an increased premium since you're older — once the term has expired. Permanent insurance, such as whole or universal life, lasts until you die. It is normally more expensive than term life but offers certain advantages. For instance, it often includes a cash value investment arm you can use to plan for retirement. Some policies offer disability coverage, as well.
How much coverage do you need?
The amount depends on your needs and intentions. If you simply wish to pay for your funeral and other final preparations, a small policy should suffice. If you wish to support your spouse and children for a few years until they get back on their feet, you'll need more. If you want to pay off a mortgage and pay for four years of college, you'll need to buy considerably more. Discuss your needs with a trusted insurance agent.
How do you name a beneficiary?
Always name a beneficiary instead of leaving it to your estate. This keeps it out of probate court and allows the beneficiary to collect immediately. Also, include the person's full name rather than simply a relationship. For instance, "wife of insured" might mean your ex could collect. "Brother of insured" might mean multiple people if you have more than one brother. Be as specific as possible.
To discuss your life insurance options with a knowledgeable professional, contact Grachek Insurance in Kalispell, MT. They're family-owned and-operated, and they have served businesses and individuals throughout the Flathead Valley and surrounding areas since 1986. They also offer high-quality, affordable business, health, home, and auto insurance. Visit their website to request a quote or call (406) 755-4000 to speak with a friendly agent.