Although it can be one of the most often overlooked insurance products, life insurance can provide valuable financial assistance to your loved ones after you pass away.
For example, life insurance can help your family pay immediate and long-term expenses. Immediate expenses include funeral and burial expenses, outstanding debts and everyday household expenses (like groceries and electric bills). Long-term expenses include mortgage payments, daycare, college funds and retirement.
Although there are many kinds of life insurance, they generally fall into two categories:
- Permanent Life Insurance — Coverage that can provide lifelong protection. It generally builds cash value (equity) that can be borrowed in the future.
- Term Life Insurance — Coverage that can provide protection for a specific period of time, such as 10, 15 or 20 years. Since it is considered pure insurance, term life coverage usually costs less.
While some life insurance policies offer first day coverage (meaning if you die on the first day your coverage is in force, the insurance policy will pay death benefits to your beneficiary), others offer modified benefits that limit coverage during the first two to three years. The advantage of a modified life insurance policy is that, generally, your acceptance is guaranteed.
Deciding which type of life insurance is right for you depends on your personal situation and family needs. While it may seem simple, there are multiple things to consider when it comes to helping protect your family's future — such as your age, income, number of dependents and the company backing the insurance policy.
Additional Information
It’s always a good idea to learn as much as you can before making any decision. A licensed professional who can explain all your options can be a great resource. Also talk to friends and family for their input.
For additional information, please visit our
Senior Resource Center.
Make sure to check out other important insurance topics, including:
This educational content is provided courtesy of Physicians Mutual®.
