There are a ton of life insurance questions out there since there are also a ton of different life insurance policies to choose from. You may be wondering about the potential benefits of the different policies available. In order to help you in your quest, here is a look at the most frequently asked life insurance questions.
Do I Need Life Insurance?
This is one of the most popular life insurance questions and the answer is “probably”. If anyone will have to assume any of your financial obligations at death such as the burial expenses, a mortgage, a car loan, or any other type of debt, then I’d suggest life insurance unless you have enough set aside. The trick is having the right amount of coverage. The greater your debt and/or financial obligations, the more life insurance coverage you may want.
What is the Difference Between Term Life Insurance and Universal Insurance?
Term life insurance is temporary insurance coverage that has to be renewed annually in order for the policy to remain in effect. It also only pays out benefits upon death. Term life insurance gets more expensive as you get older each year, but it is generally a cheaper option that allows even those with a tight budget to be able to afford coverage. It comes in most handy for people who only need coverage for a certain period of time while they are building up the resources to handle their financial obligations themselves.
Universal insurance is a permanent life insurance policy in which payments are made over the course of several years. Universal policies offer flexibility when in comes to premium payments and the cash benefit received. Benefits can be increased or decreased by the account holder, and the policy can be redeemed for a cash value.
Where Can I Find Life Insurance?
It’s easy to find a policy that fits your unique situation. You can use online websites to research policies and the difference in premium amounts that need to be paid. You can also call a company directly or speak with an agent in person so that they can answer any questions that you may have. I’d highly suggest getting quotes from several companies so you can track down the best rate.
Can You Borrow Money against Your Policy?
It depends upon the type of policy that you buy. For example, universal life insurance policies allow you to borrow against the cash value portion of the insurance policy. Any money that is owed on the loan is deducted from the benefits paid out at death.
On the other hand, basic term life does not have a cash value. Its only purpose is to pay out an agreed upon sum of money if you die while you have the policy. That is why the payments for term life are generally less expensive than universal life.
Can a Person Have More Than One Life Insurance Policy?
Yes. For example, at my company we all get a small term life insurance policy as part of our benefits. If we want additional coverage, we either pay extra to that term life group policy to increase the death benefits or we obtain another policy elsewhere. Since my husband and I have very little debt and are saving for ourselves anyway, I chose to pay the extra $2 a paycheck to increase my group term life policy coverage.
What other popular life insurance questions can you think of?