Life Insurance

Reagan Stultz

What is life Insurance? Do I need it?

If you died right now who would be affected financially? Do you have a spouse who needs the combination of both incomes? Are you a single parent? Do you have elderly parents who rely on you? If you answered yes to any of these questions it is a good idea to have life insurance. Life insurance ensures your beneficiaries financial securities after your death. Life insurance can cover immediate expenses such as your funeral, Income/ongoing expenses and long term/future expenses such as college for your children.

What type of life insurance are there? How to I choose which is right for me?

The two main life insurance types are term and whole life insurance. Term life insurance is life insurance that covers you for a set period of time, such as ten, fifteen or twenty years. This is a good type if you expect that no one will be depending on you after that set period of time. This type is cheaper when you are young and your premium increases with age. With this type of insurance you cannot cash out before your death. Also if the time period is set at ten years and you pass away at ten years and one day, the term has expired and your beneficiaries will not get any benefits. Whole/Permanent life insurance protects you through your entire life and does not expire. The premium does not increase with age and it can be harder to afford initially. The factors below apply for both term and whole life insurance when you originally buy into the insurance, however with term the premium will increase as you age. With whole life insurance there is a cash value, so you can cash out and enjoy the money for yourself. That being said the cash value will be less then what your policy was because you are opting out earlier.

What factors will affect the premium I pay?

The law of large numbers is like legal stereotyping, it allows insurance companies to use statistics to determine the risk of a client. This is why your premiums may very depending on the factors below.

  • AGE The older you are the higher your premium with term life insurance. Your rate will stay the same with whole life depending on when you buy in, for more information read the paragraph above.
  • Gender Females typicality live longer than men, so females have a lower premium.
  • Family health history If your family members have died due to health issues, they can increase your rate.
  • Hobbies If you do dangerous activities in your free time your premium can increase
  • Job If you have a higher risk of injury at your job ( ex. construction worker) you may have a higher premium .
  • Lifestyle If you have healthy habits your premium will decrease.

How do I get a life insurance policy? How do I determine how much it is worth?

Start by going online to compare different agencies. An agent is someone who sells the insurance polices. Most agents recommend enough coverage to replace 15 years of income, you should also add any debts that will need to be payed off. An actuary asses the risk of insuring you. Sometimes if you engage in too many dangerous activities the insurance agency can deny you coverage.