Speak with an experienced advisor!
877-235-9299

How Does Life Insurance Work

For anyone just getting started out on their own and trying to come up with a good financial plan the question always comes up, “How does life insurance work?”
This article will help you break down this question so when you are having the conversation with others you can be the genius that explains the how does life insurance work question.
Life insurance is one of the most important investments that you’ll ever make for your loved ones. It’s important that you make the best decision for your life insurance needs to ensure that your family has the money that they need, regardless of what happens to you.
Because it’s such an important purchase, it’s vital that you understand all of the all of the options for insurance coverage and the different parts of a life insurance plan. We know that finding life insurance coverage can be a difficult search, but we are here to help ensure that you’re getting the best plan to meet your needs.

How Does Life Insurance Work – Term Life Insurance

How Does Life Insurance Work?Term life insurance is the simplest form of life insurance.  You pay a monthly premium and in the event that you were to die your beneficiary (the person you designate to receive the life insurance money) receives payment of the face value of your policy.
The word “term” in term life insurance is used to designate an amount of time in which the premium (your monthly payment) does not change.  So, if you get a $500,000 30 year term policy and the premium is $60 per month, it would stay $60 per month and not go up or down for 30 years.  At the end of 30 years the policy ends and both you and the insurance company are winners.  You, because you are still alive, and the insurance company, because they received thirty years of premiums and did not have to pay out.
Term life insurance is also the cheapest form of life insurance.  If anyone were to ask you “How does life insurance work?” I would only tell them about term life insurance because the next form of life insurance is much more complicated and expensive.

How Does Life Insurance Work – Whole Life Insurance

There are a few different varieties of this type of insurance (universal, whole life, etc.) but what makes it different from term life insurance is, not only does it have a face value for how much your beneficiary would get if you were to die, but it also has a cash value.  This cash value works like an investment that accrues over time.  This cash value feature costs a lot more money on your monthly premium as compared to term.  Typically at least 3x more expensive - usually more.  It’s more expensive because not only are you paying for the life insurance you are paying for the investment and the management of that investment.
The vast majority of people are better off getting term life insurance and then using an investment house like Fidelity or Schwab to manage their investments.
Additionally, whole life insurance is a great option for life insurance coverage for anyone that doesn’t want to have to worry about reapplying for life insurance coverage in the future. These plans are a permanent form of coverage. As long as you continue to pay the premiums, you’ll have insurance protection.

Calculating Your Life Insurance Needs

One of the most important parts of your life insurance policy is the size of the payout. It’s vital that you purchase enough coverage for your family. Not having enough life insurance protection could leave your family with additional expenses, which is going to make an already difficult situation a thousand times worse. When you’re calculating your life insurance needs, there are several factors that you should take note of.
The first number to crunch is all of your debts and other expenses that your family would be responsible for after your passing, like your funeral expenses and related taxes. The primary purpose of a life insurance plan is to give your family the money that they need to pay off your left behind bills.
The next factor to consider is your annual income. Your life insurance policy will give your loved ones the money that they need to pay for any basic needs. Without your source of income, your family could suffer financially, and during this difficult time, the last thing they should be worried about is money. It’s important that you have enough life insurance to give them the funds that they need, regardless of what happens to you.

Getting Affordable Life Insurance Protection

One of the most common reasons that people don’t purchase life insurance is because they assume that a plan is going to be too expensive to fit in their budget. In most cases, life insurance is going to be an affordable option to give your family financial security. There are several ways that you get better premiums from the insurance company and keep more money in your pockets.
The first thing that you should do is cut out any tobacco that you currently use. If you’re listed as a smoker on your life insurance application, you’re going to be facing higher premiums for your insurance coverage. Smokers are going to pose a much higher risk to the insurance company, which they are going to offset by charging you higher rates. If you want to get the most affordable plan, you’ll need to kick the bad habit once and for.
Another way that you can get better rates is by starting a healthy diet and getting regular exercise. Both of these are going to help you get better rates from the medical exam, which is going to translate into lower premiums. A diet and exercise can help you lose weight, lower your blood pressure, lower your cholesterol, and reduce your risks of being diagnosed with any health complications. If you want to save money on your life insurance coverage, it’s time to lace up your running shoes and hit the gym.
The best way to ensure that you’re getting the best plan is to work with an independent insurance broker. Unlike a traditional agent, independent brokers work with dozens of highly rated companies across the nation, which means that you can get all of the best rates delivered directly to you.
Every insurance company is different, and all of them are going to have different requirements for their premiums rates. That means that you could get drastically different rates depending on which company that you get the quote from. Finding the best life insurance company for you could be the difference in finding an affordable plan or paying for coverage that breaks your bank every month. Instead of wasting your time calling insurance agents yourself, let one of our independent agents do all of the work for you.
I hope this article helped you get a better understanding of life insurance.  If you're ready to take the next step and get life insurance quotes, you can obtain online term life insurance quotes by filling out the form on this page or you can learn more about getting deals on term life insurance HERE.  If you are just starting your research you can check out the best life insurance companies.
Either way I'm certain the next time the question "how does life insurance work?" comes up in your conversation, you will be ready to give the answer.
Life insurance is one of the best purchases that you’ll ever make for your loved ones. We know that nobody wants to think about his or her own death, but it’s vital that you plan for the worst. Life insurance can be confusing. There are dozens of different factors that you’ll need to consider, it can be overwhelming, but we are here to help. Our independent insurance agents can help walk you through the process to ensure that you’re getting the best plan to meet your needs.
Because you can never know what’s going to happen tomorrow, you shouldn’t wait any longer to get the life insurance protection that your family deserves. If something tragic were to happen to you, your loved ones would be responsible for a mountain of debt, which will make a difficult situation a thousand times worse. If you have any questions about life insurance coverage or getting an affordable plan, please contact one of our agents today. We would be happy to answer those questions and ensure that you’re getting the best plan to meet your needs at an affordable rate. It’s out mission to ensure that your family will have the money that they need.

Copyright © 2017 TermLife360.com - All rights reserved.
This site provides life insurance information and quotes. Each rate shown is a quote based on information provided by the carrier. No portion of TermLife360.com may be copied, published or distributed in any manner for any purpose without prior written authorization of the owner.
phone-handset