Important Life Insurance Facts
In the US, only 54% have life insurance coverage. Many of these people overestimate the premium cost they need to pay.
The question is: how do you decide whether to get insurance or not? What factors do you usually consider in the decision process?
There are many factors, but you should stick to the facts. Here are some life insurance facts you should keep in mind while looking for insurance that suits your needs.
Insurance is for everyone.
Do you know one of the most common misconceptions on life insurance? That it is for healthy and young individuals. So, when you have underlying conditions and are old, you can’t get insurance.
You can still get life insurance as long as you’re within the insurable age. Generally, the insurance age is those 80 and below. A few insurers would go above 80.
You can afford insurance.
You can find affordable insurance that is perfect for you and your family’s protection. The only difference is the actual costs of premiums.
Healthier and younger individuals enjoy a lower premium, not just because of their age. Generally, younger people have lower health risks.
Other age and health-related factors include gender and smoking history. These affect your premiums.
Insurance is essential regardless of life status.
Let us cite two scenarios.
Scenario 1: You got married and have children.
Scenario 2: You’re a student with loans.
Here is the question. Which scenario needs insurance?
You probably would have answered scenario 1. The truth is you need MD Life Insurance in both. Whether you have no children or die as a student with loans, your insurance can protect your family.
How? First, insurance can pay off your outstanding debts, whether it’s a car or student loans. Indeed, federal debt is forgiven when a student dies but not private loans (in most cases).
Second, life insurance takes care of funeral expenses and other related expenses. Who do you think would pay for those expenses if you don’t have insurance? Yes, your family. So, avoid putting the burden on them when you’re gone.
Your beneficiaries don’t need to pay tax.
Income tax is one of the reasons some Americans don’t consider getting insurance. Many think that their beneficiaries will pay taxes.
Fortunately, benefits from life insurance are free of income tax to some extent. There’s a threshold, and you can use that to plan your estate.
However, income from interests is taxable. If you aren’t sure, consult your legal advisor or any tax expert for more details.
Insurance is convertible to a certain degree.
The possibility of converting term insurance depends on the policy. Some policies allow conversion from term to whole life insurance with a higher premium rate.
Check with your provider which policies are convertible. You must know the details. This is to avoid wasting on a policy that you can’t convert when you outlive your current insurance or reach the insurance age.
Your savings aren’t enough.
If you’ve been saving for your retirement, that’s a good thing, and most Americans do this. However, many families find out that these savings aren’t enough. The sad thing is that your beneficiaries don’t have a choice but to pay for the burial costs.
A funeral may cost at least $7,000. This amount is significant, especially if your spouse is earning minimum wage.
Even if you leave your family in a wealthy status, a 7000-dollar burial isn’t practical in estate planning. So, protect your family and ease them of the burden of paying unexpected costs.
You don’t have to earn a lot to get insurance.
Statistics say that around 50% of people overestimate the cost of insurance premiums. Thus, they think that they can’t afford to get one.
Whether you’re earning average or no income, you need insurance. A policy can have 13-dollar premiums and coverage of $250,000.
Again, the final computation depends on how much premium you can pay for a period. Remember the first fact. Insurance is for everyone, and all you need is to ask your insurance provider for the best one.
Insurance can cover suicide to some extent.
Most insurance policies have a contestability period and will include suicide provisions. The contestability period lasts from two to three years. When the insured dies by suicide after the exclusion or contestability period expires, beneficiaries can still receive the benefit.
Also, you should take note of any changes and their effects on the contestability period. Any change in the policy resets the exclusion period.
Conclusion
Again, anyone can buy insurance regardless if you have underlying conditions and are above 30 years old. Remember, the insurable age is up to 80 (or 85 in other providers).
Despite the massive move in educating people about insurance, many still don’t understand some fundamentals. If there’s something you don’t understand in the policy, always ask your agent about it.
About Moody Insurance Worldwide
Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.