Regardless how much money you make or what assets you own, the road to economic security can be surprising. Including life insurance in your financial plan can help provide that security, both financially and as peace of mind. However, shopping for coverage can be complicated, and it can be challenging to understand all the options. Clearing up any confusion you have will help ensure your loved ones end up with the protection they need after you pass away. Here are the answers to a few questions people frequently ask before buying a policy. 

What to Know About Life Insurance

Why is life insurance important? 

Life is full of unexpected events, and many families are left facing financial hardship after a loved one’s untimely death. With a life insurance policy in place, you can be sure those who depend on your income now will still be taken care of once you’re gone. They’ll receive a tax-free payout they can use to help maintain the same standard of living and cover expenses such as your funeral costs, outstanding debts, and estate taxes.

How much coverage do I need? 

The amount of coverage you need will be based on your financial responsibilities. To determine the appropriate amount to purchase, add up all of the expenses your survivors would have to cover upon your death. This should also include future obligations, like a child’s college tuition. Additionally, consider how many people are dependent on your income and, if you’re married, what your spouse’s earning capacity is.

What’s the difference between term and whole life policies? 

Term policies are purchased for a pre-determined coverage period, and death benefits will only be paid should you pass away within that time frame. This is typically the least expensive way to secure coverage. In contrast, whole life insurance policies are designed to provide lifetime protection. They also offer cash value that builds up when premiums are paid, and funds can be withdrawn any time while you’re still alive.

What should I consider when designating a beneficiary?

Choosing the beneficiary of your policy is a critical decision. This is who will receive the death benefit after your passing. You can name one person or multiple people. In either case, it’s best to also designate a contingent beneficiary in the event your first choice is unable to collect the funds. You should also avoid choosing a minor, as insurers won’t provide a payout directly to children. 

If you’re serious about setting your loved ones up for a healthy financial future, contact an agent at Truax Insurance to find the most suitable life insurance coverage for your needs. The agency has been trusted to provide residents throughout St. Lawrence County, NY, with high-quality products at affordable rates since 1949. They’ll help you customize a solution that offers adequate protection for whatever life may bring. Call (315) 393-3805 to request a quote, or visit them online for more information on their services.