Learning about life insurance policies can often feel like going back to school again, and starting right from the first grade. Life insurance policies are a breed unto themselves, with a special purpose and likely terminology you have not heard before now. But it is possible to simplify the process of learning about life insurance policies and deciding which type of policy will best meet your needs for now and in the future. Life insurance is often a product that adults do not start thinking about until you start a family. Once dependents are involved, life insurance becomes a much more critical need. This is also why it can be helpful to research what you need to know about life insurance policies in advance so you are already prepared to protect your family financially in the case that it is needed later.
Learn here the basics about life insurance policies so that you can become educated on the best policy for your needs:
The two main types of life insurance policies are called "term" and "pure" (sometimes also called "whole" or "universal") life insurance. Term life insurance is a simple, inexpensive policy with a focus on insuring your family to be able to afford funeral and burial costs and replace lost income if you pass away before the policy term expires. There is no cash value, no investment value, and no perks or benefits with term insurance, and if the policy expires unused, you must start the applications process all over again. With a pure life insurance policy, the application is often much more extensive and the premiums more extensive, because pure or whole life insurance policies are designed to stay and grow with you all throughout your life, and can even be assigned to beneficiaries as part of your last will and testament.
Because there is a risk to the insurance company for insuring anyone for life insurance, applicants are required for all but the most specialized of situations to go through a medical examination as part of the standard application process. It is very important to be honest during the medical exam and while giving your family medical history, as future claims may be denied if discrepancies are later uncovered.
You will need to do a thorough assessment of your present day and future worth, the impact of lost income on your family's ability to maintain their standard of living should you pass, and any outstanding debts such as auto or mortgage loans that may be placed in jeopardy with a sudden loss of income. Also factor in future higher education costs and costs for childcare and other expenses should your spouse become a single parent and need to return to work. The more thorough you can be when assessing the financial impact of your passing on your family, the more your life insurance policy will protect you.