Travelers Insurance Raleigh NC/span>
Travelers Insurance Raleigh NC/span>
Is getting life insurance a worthy investment?
If you have dependents, especially if they are still young, it would be worthwhile to get yourself life insurance. In the event of your passing, you have peace of mind that you don’t leave behind your loved ones emotionally and financially wanting.
However, it’s not for everyone.
Below are some scenarios where you may have to forego a life insurance policy:
- If you don’t have dependents and living alone
- If you are already set for life financially and can leave an inheritance for your loved ones
It’s tempting to include “no money” as the reason for not buying life insurance. However, you can rectify the situation by managing your budget and skimping on some luxuries you are accustomed to having.
As problems in life come and go, the easiest thing to set aside or overlook is your budget, especially considering the stakes involved.
Things to Consider Before Contacting Your Life Insurance Agent
Here are some things you have to know before purchasing a policy to protect your loved ones:
You don’t automatically qualify for life insurance
The insurer will screen all applicants to ensure they meet the minimum standards for eligibility. For instance, if you have a preexisting condition that puts your health at risk, you might not be able to qualify.
An insurance company may also deny your application if you:
- Have a history of suicide;
- Suffer from long-term depression;
- Struggle with alcoholism; and
- Like to engage in risky activities (adrenaline junkie)
With that said, a chronic illness like diabetes or hypertension won’t automatically disqualify you, either. It depends on the assessment of the insurance company. You will likely pay a higher premium if you are considered medically risky.
You may not get your money back
Life insurance provides you with a fail-safe plan to secure your family if something happens to you. That peace of mind is renewable each year. Yet, there is a good chance that you will outlive your insurance, which means you get nothing. This type is known as term insurance, and it can confuse some people who might not understand the conditions of their policy. Term insurance is cheaper, but it can also expire.
You might want to get permanent coverage, which means it will last until death. In this case, your beneficiaries will receive the money upon your passing. However, some insurance policies allow you to withdraw your money plus interest once the policy matures. You must clarify your requirements with your agent to avoid future misunderstandings.
Choose your beneficiaries carefully
When choosing a beneficiary, the default for most people would be their kids or spouses. But you have to think about a few things. For instance, if your children are still underage, they won’t get the benefits until they turn 18. In such cases, the court may appoint a guardian, or the money will be put in a trust fund until your children are old enough to withdraw it. In contrast, if you put your life insurance against your estate, your beneficiaries must prepare to pay taxes.
Travelers Insurance Raleigh NC/span>
Travelers Insurance Raleigh NC/span>
When naming other people as beneficiaries, in some states, your spouse may need to sign a waiver if you decide to do so.
Know your goals
Most people are unaware you can purchase life insurance for your business. The overarching goal is to protect your company after death. The money can go to paying off debts, ensuring investor confidence, or keeping the business running while management is in a temporary flux.
More than anything, your family avoids using your personal assets to prevent the business from folding. However, if you are not confident that someone from your family can replace you, you may be better off naming them as your direct beneficiaries. You can name the life insurance after your business if you have a partner you trust with your life, knowing that they will take care of your family in return.
Insurance can be a good investment
Permanent life insurance can be a good source of funds if you need to borrow against your net cash value. The only downside is that it takes time for you to raise your stock. However, you must also understand that the insurer will deduct the amount from your total death benefit. On the other hand, you don’t have to pay back the amount that you borrowed. Just make sure you have enough liquidity, so you don’t leave your surviving family in a financial mess after your passing.
In conclusion, you must evaluate your financial status to determine the life insurance you can afford. You might just waste your money if you can’t pay your premium religiously. Typically, you have a grace period to settle your payment upon the due date.
During this term, your life insurance policy still covers you. However, your beneficiaries will not receive the death benefits if you continue to ignore your premiums.