Life insurance is a necessary protection which should be a part of everyone’s long-term financial plan.
When you purchase a life insurance policy, you ensure your loved ones will have all the financial support they need when you die.
When you take out a life insurance policy, knowing how it works and how your loved ones receive the policy’s benefits is important.
What is Life Insurance?
A life insurance policy is a contract made between you and the insurance company. The contract states it will pay out a death benefit whenever you, the policyholder, pass away.
There are many types of life insurance plan options to choose from, including term and whole life insurance. You can choose a policy to suit your family’s financial needs and your current budget.
What Can it Cover?
Life insurance is designed to replace the income your family or other dependents receive while you live.
This can cover financial obligations such as mortgage payments, end-of-life expenses like burial costs, tuition payments, outstanding loans, credit card payments, or daily expenses like food or clothing.
- Term life insurance is the most common instrument people opt for, but whole life provides a consistency that suits other people’s preferences.
- Universal life is an increasingly popular choice due to its flexibility. Universal policies allow the insured to increase or decrease death benefits, and also offer more choice in premium payment amounts and timeframes.
- Whole life insurance is a truly permanent coverage, guaranteed by the insurance company, as long as you maintain your premiums.
While each type of life policy has its benefits, every client’s particular circumstances—personal and professional—will dictate which option best suits them at this specific point in time.
The benefits and coverage options you and your beneficiaries receive from your life insurance plan depend on what each policy offers.
In general, life insurance policies cover most causes of death. This can include natural and accidental causes, homicide, and suicide, depending if there are any clauses which otherwise forbid it.
What Does it Not Cover?
There are some situations that may prevent the beneficiaries from receiving the death benefit. One unfortunate common cause is due to there being a lapse in payment.
Benefits may also be denied if policyholders omit information about their health when they initially applied.
In addition to these causes, an insurance company may also deny a claim due to the circumstances of the policyholder’s death.
If the policyholder dies due to homicide, the company will deny the claim if the beneficiary is the one responsible for their death or was involved in their cause of death in any way.
Insurance companies may also deny claims if the policyholder dies while participating in a high-risk activity such as skydiving.
Therefore, it is important to talk about what your coverage limits are before you purchase a life insurance policy.
Are there Policy Limits?
There are some limits on life insurance policies depending on the type of plan you choose. Many policies will only pay out a death benefit if the policyholder dies before they reach a specific age.
You may also be limited to the amount of coverage you can receive. Some companies may limit your coverage to 25 to 35 times your annual income.
Why Choose Kenneth Rhodes & Associates
Let our experienced agents at Kenneth Rhodes & Associates guide you through the process of identifying the right life insurance policy which will supply ample protection for your family without keeping you cash-strapped with high premiums.
Whether you are looking to provide a benefit for your spouse, children, or other situation, we have the ability to find the best match.
Since we are a full service insurance agency, we may be able to bundle your life insurance policy with other insurance products to get you a better price than you can get with a single policy.
Contact a member of our team from a location that allows you to work directly with a local agent.