September is Life Insurance Awareness Month, a campaign designed to educate customers about the benefits and options available for this type of coverage. Now is a perfect time to explain what life insurance is, what it covers, and how it works. Below is a brief introduction to the subject.

How Does Life Insurance Work?

Like any type of risk management tool, you can purchase a policy and pay premium for coverage. In return, if you should die while the policy is in effect, your beneficiaries receive a pre-determined death benefit. You can assign the benefit to a spouse, your child, or even a non-profit agency.

What Are the Basic Types of Life Insurance?

The two primary types are term life and permanent. Term life lasts for a preset term of years—often 5, 10, or 20—during which your rates will not increase. However, once the term expires, if you wish to renew the policy, you will have to pay more—because you are older now. It is basic, inexpensive, and has few bells or whistles.

Permanent life insurance, on the other hand, lasts until you die considering premiums are paid or their is sufficient cash value to carry the premium. It also usually includes additional features like disability insurance or an investment component that lets you accumulate wealth you can withdraw during your life. It is more expensive and often requires a medical exam and insurer approval.  Some companies have policies that allow for flexibility.  For example, you may be able to set the policy up like a term policy, such as like when you are beginning a family.  You pay term premiums, but it is still a permanent policy.  This is important because, at the end of a term, not only will the premium be higher based on your new age; you may also have to prove insurability.  If your health has changed, you may not be able to get another policy.  And, at any time, you have the flexibility to pay higher amounts to start building your cash value. 

What Are the Benefits of Life Insurance?

It lets you provide for your dependents, even after you are no longer around. You can pay off a mortgage or other debts like medical expenses leading up to your death, provide them with an income, or even pay for your kids' college. If you don't have dependents, you can pay off debt that might otherwise fall on the shoulders of a loved one. You can also use the benefit to pay for your final expenses, so you don't financially burden family members already dealing with the grief of your loss.

To have an experienced agent help you design a life insurance policy that meets your needs and fits your budget, contact Mitchell Insurance Agency LLC in Houston, MO. They have served clients in and around Texas County since 1949, with auto, home, life, farm, and business insurance. To reach them, stop by their website to send a message or call (417) 967-2140 to request a free, no-obligation quote.  You are also always welcome to stop in and discuss coverages in person.