Amarillo Insurance
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Life Insurance Basics You Should Know
It is important to understand some life insurance basics before committing to a particular policy. We work hard to take care of our families and our goal is to protect those who depend on us. But, unfortunately, many of us are unaware of how significant life insurance could be in the future well being of those we love.
Do I need to buy Life Insurance?
Mike
Amarillo, TX.
Great Question.
When you buy a life insurance policy, your beneficiaries can use the money to cover the bills you leave behind. Believe it or not, the costs associated with your funeral and burial will likely reach many thousands.
In addition, there may be costs involved in settling your estate. You may have medical bills that your health insurance did not cover or other types of debt. When your loved ones are grieving, they don’t need the additional burden of worrying that these expenses may potentially spell financial ruin.
Here’s another reason to consider. When you buy a life insurance policy it can be used as a way of leaving something of value to your heirs. All you have to do is name as beneficiaries the individuals you choose to inherit your policy.
Or, instead of naming individuals as beneficiaries of your life insurance policy, you could choose a charity as the beneficiary.
Given the above reasons, buying a life insurance policy just might make sense after all!
Tara,
Whole life also contains a cash value account that builds over time, slowly at first and gaining steam after several years. You can withdraw your cash value or take out a loan against it, but remember, if you die before you pay back the loan, the death benefit paid to your beneficiaries will be reduced. For example:
Susan has a $500,000 whole life policy in force and, over the years, has
borrowed continually from the cash value. Her total loan amount and accrued interest totals $300,000. When Susan dies, her beneficiary will receive $200,000 because the life insurance company will first pay itself back from the death benefit.
Understand what your beneficiaries will receive upon your death. If you have a traditional whole life policy, your beneficiaries receive only the death benefit no matter how much cash value you’ve built up.
Great Question.
Can I leave my Life Insurance policy to my Family?
Good life insurance policy can be passed on to your heirs if you name them your beneficiaries. Therefore, if you do not have any other funds to leave behind, you can still leave your heirs the money that your life insurance will provide.