In Life

What You Need to Know About Life Insurance

We all know we need car insurance and homeowners insurance. We can even pretty easily understand and imagine its value, but for many, life insurance is a bit more mystifying. Perhaps it’s the complexity of life insurance policies, conflicting messages from providers, or a very natural disinclination to think about our own mortality, but far too many Americans file life insurance away in the “I’ll get around to it” corners of their minds. And all too many never manage to get around to it.

Now’s the time to check life insurance off the to-do list. It’s never too late to consider the financial security of our loved ones and a good life insurance policy is a great way to make sure our loved ones are protected, no matter what the future may bring.

Why You Need Life Insurance

Life insurance provides families with financial security in the event that a spouse or parent dies unexpectedly. Life insurance benefits can be used to pay off a mortgage, fund education expenses, or pave the way for retirement. It can also be a key factor in estate planning.

A common myth propagated by noir movies, genre novels, and late-night TV is that life insurance simply applies a cold, hard monetary value on someone’s life. In reality, a good life insurance policy helps compensate your loved ones for the financial consequences (whether loss of salary or loss of services) that accompany death. Life insurance lessens the burden on families in difficult time.

Put simply: if someone relies on your income or your contributions to the household, then you need life insurance.

A Glossary of Life Insurance Terms

Policy: Life insurance is a contract (also known as a policy) between the life insurance company and someone who has a financial stake in the life and livelihood of another individual.

Death Benefit: Insurance companies compile the premiums of policyholders and pay out claims in the the event of a death.

Insurer: The insurance company responsible for the policy

Owner: The person responsible for paying the premiums

Insured: The person covered by the policy

Beneficiary: The person (or trust) designated to receive the claim (or death benefit) in the event the insured passes.

Types of Life Insurance Available in Tennessee

Term life insurance provides the easiest and most affordable way to protect your family. With term life, the insurance company bases the premium on the probability that the insured will pass away within a stated term (generally 5, 10, 20 or 30 years) and the premiums are guaranteed for the length of the term.

Universal life insurance gives policyholders greater flexibility with the low-cost protection of term life insurance and the bonus of a saving element. Premiums can be reviewed and modified over time and interest from savings can be applied toward the premium payments.

Whole life insurance is a form of permanent life insurance with guaranteed premiums, benefits and cash value, in perpetuity. These kinds of policies may be great for retirement planning purposes.

Questions to Ask Your Insurance Agent About Life Insurance

Now that you know the basics of life insurance, it’s important to know the right questions to ask when shopping for a new policy.

  • How much coverage do I need?
  • I’m a stay-at-home parent, do I need life insurance?
  • My employer provides life insurance, is it enough?
  • What kind of life insurance policy is best for my family?
  • Will my survivors receive Social Security benefits?
  • Will I be covered if I am unable to work or become disabled?
  • Will my premiums increase?
  • Is a medical examination required?
  • What kind of exclusions are there?

We’ll help you make the right life insurance choice for you and your family. Get a free life insurance quote by contacting Royce Williams Insurance today.

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