June 30 – What you need to know about life insurance | Health care

Millions of adults go to great lengths to protect their assets. These measures range from simple day-to-day efforts like using two-factor authentication when accessing financial accounts through online or mobile banking apps to more complicated ventures like estate planning. Life insurance is an essential part of estate planning for anyone looking to protect their assets in the event of death.

Explain life insurance

Life insurance is both similar and different from other types of insurance. Like home and auto insurance policies, life insurance provides financial protection in difficult circumstances. A life insurance policy is a contract between an insurance provider and a policyholder that guarantees payment to beneficiaries named by the insured following the death of the insured.

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Insurance providers differ, but those interested in life insurance can expect to be asked about their medical history and lifestyle habits when reviewing policies. Potential policyholders will often be asked to sign waivers that allow providers access to their medical records. This is necessary so that companies can get an idea of ​​the medical condition of the person applying for life insurance, which will determine the cost of a policy. This information, along with family history, is important because it can serve as an indicator of future health risks. Some variables, including lifestyle habits such as smoking, will not necessarily show up in an individual’s medical history. In order to solve this problem, insurers generally ask potential policyholders to answer various questions about their lifestyle, including whether or not they smoke and how much alcohol they drink. It is essential that individuals answer these questions honestly, as companies can deny payouts to beneficiaries if they determine that policyholders have misled them during the application process.

Cover

Coverage needs vary by individual. Life insurance is intended to support loved ones following the death of a policyholder. How much money will these people need to pay their bills? Young adults who have just started their families may want more extensive coverage than aging adults who have already paid off their house and saved a considerable amount for their retirement. The National Association of Insurance Commissioners recommends that individuals consider how much of the family income they provide and whether anyone else, such as an aging parent, is dependent on them for financial support. Answering these questions can help individuals determine the level of coverage they need.

Types of coverage

Insurers offer different types of life insurance policies. Term life insurance policies are among the most popular as they tend to be affordable while still providing substantial coverage. There are different types of term life insurance policies, but policies tend to last 10 to 30 years and expire when individuals reach retirement age. This is because many people are saving enough for retirement and don’t have the big expenses, such as a mortgage, to consider at this point in their lives. This means that next of kin will not necessarily need to be provided for following the death of a policyholder.

Permanent life insurance policies last until the death of the policyholder as long as they continue to pay premiums on time. Financial advisors can help individuals understand the ins and outs of different types of permanent life insurance policies, which differ from term life insurance policies because they can serve as investment vehicles and sources. loans in some cases.

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