How Life Insurance Works

Life insurance is a type of insurance that pays out a beneficiary or beneficiaries in the event of the death of the insured. Most people with life insurance want to leave their children and a surviving spouse a financial death benefit to pay for final expenses and more. Sometimes, life insurance policies are used as a savings account for a child, which can be used later to pay for college or any large expense, like living expenses for survivors.

Just as you do with car insurance or home insurance, you pay a monthly premium for life insurance to keep a policy active. You often have the option of paying twice a year or annually. Insurance is a contract which guarantees that the insurance company will pay out what it promises to as long as you make timely payments on your premiums.

There is often a waiting period before coverage goes into effect with a life insurance policy. Also, your benefits may not be paid if the circumstances are excluded in the policy (always look for exclusions on all insurance policies). Some plans also require a physical exam, which makes a policy more expensive if you are in poor health.

You can choose anyone you’d like to be the beneficiary of a life insurance policy. After you buy life insurance, make sure to tell your beneficiary about the life insurance policy so they can collect it from the right company when the time comes. Often, those left behind need to continue making mortgage payments or paying rent so you don’t want them to be delayed a payout. The right life insurance can make a great difference to your loved ones.

After a beneficiary of a life insurance policy submits an insurance claim, they usually get the death benefit within a couple of weeks.

Most Americans have no life insurance or inadequate life insurance. The majority of people who do have it buy it from the policy offered at work. Unfortunately, these plans can be expensive and the coverage is often lacking. You can often get more affordable life insurance policies through a private individual plan. Get affordable life insurance quotes by filling out a form here.

When electing what kind of life insurance you should buy, take into consideration what kinds of costs you expect your insurance to cover (education, loans, credit card debt?). Can you afford to settle on your employer-provided life insurance? What if you lose your job? You’d lose your policy unless you change it to a permanent life policy, which will be expensive.

The better health you are in and if you are a non-smoker, the cheaper your life insurance plan will be. You’d be paying even less for individual life insurance, the healthier you are as opposed to a group plan, which would include people with pre-existing conditions.

Some life insurance policies have a cash value, others don’t. Some life insurance policies only cover a specific period of time and others cover you for your entire lifetime. 

Where you live may impact your life insurance policy so let your insurance company know in advance if you plan to move. You should always make sure to select a trusted and well-established life insurance company to ensure a timely and adequate payout to beneficiaries. To be placed with a trusted insurance agent, visit here.

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