Life insurance may not be the first on your mind to discuss in today’s society, but it’s an integral part of life and taking care of your loved ones after you’re gone. If you don’t have life insurance and you’re on the fence about enrolling in a program, check out a few things you probably don’t know about life insurance to help you decide and pick the perfect policy that fits your specific needs
There are Different Types
Most employers offer some form of life insurance as long as you remain at that company, but there is also term life insurance and permanent life insurance. Term life insurance offers lower premiums because it only covers a specific period, usually 20 years. Permanent life insurance often has higher premiums, but this type of insurance lasts for as long as you continue to pay your premiums. One type of whole life insurance is burial insurance, which offers a death benefit between $5,000 and $25,000 for covering the cost of your funeral and other funerary services. Premiums for burial insurance are handled at the weekly or monthly level and will provide more or fewer benefits based on the insured person’s age at the time of death.
You’re Going to Need More Coverage
Most people think of life insurance as a way for your loved ones to pay for your funerary services, casket, and other death expenses, but it’s designed to help your loved ones take care of themselves after you’re gone. This support is especially needed if you’re part of a single-income household where you’re the breadwinner, as it could leave your family members in a tough spot after your death if they only have enough to cover what your funeral costs. When planning how much life insurance you need, you should consider how much your final expenses will cost, any outstanding debts you may have, the cost of your outstanding mortgage, and how many children will need college funding. Calculating all of these costs will help your family be more secure after their loss.
Life Insurance is Usually Tax-Free
One of the reasons for families not taking out enough life insurance is that they don’t want to burden their family with a massive tax bill after their death. Most life insurance policies are tax-free and are paid out quickly. In contrast, some of the ways people have started raising funds for those without life insurance is by using crowdfunding services like GoFundMe. These services are not tax-exempt, and the onus of paying taxes on any generated income through this method lies on the bereaved. By setting up a life insurance plan and paying your premiums each month, you’re contributing to a tax-free fund that will make sure you’re taken care of after you’re gone and that your family is set for any financial troubles they may face due to the loss.
Be Sure to Read the Fine Print
While the term life insurance sounds cut and dry, there are plenty of riders that change the nature of how this insurance is distributed. Some policy creators offer riders for accidental death, accelerated death, disability income, and more. Check with your chosen policyholder to see which riders are available for your life insurance plan and how you can benefit from them.
