Although most people generally think about getting car insurance before getting life insurance, it’s one of the most important types of insurance you can have as it protects your family financially and offers peace of mind. There are a few ways to go about getting coverage - here’s how to navigate your life insurance options.
The Basics on Life Insurance
Life insurance creates a death benefit that allows your family to continue on financially, meaning they can pay bills and carry on with plans like paying for college. If you have dependents or debt, life insurance is imperative to have, especially in the midst of COVID-19, to ensure your family is covered. If you don’t have dependents or a significant amount of debt, life insurance is not as important.
Term vs. Whole Life Insurance
There are several kinds of life insurance but the two most common types are Term and Whole. Term life insurance is like renting an apartment where the landlord takes care of the tenants during the duration of their lease. Term life insurance covers your family if you pass away during the term of your coverage. Most people will benefit from Term coverage because it is much less expensive and offers adequate coverage for the everyday families.
Whole life insurance is like owning a home. The more you pay in, the more equity you have in your policy, and you can borrow against that equity. While this type of coverage does come with much higher costs, it also includes an investment benefit along with the direct financial coverage your family will receive should the insured die. This option works better for families with higher income levels and a range of assets, but is not normally necessary for everyday families.
Individual vs. Group Life Insurance
Individual life insurance is the most common kind of life insurance. It provides affordable coverage for families and is not tied to employment. This means that if you no longer have a job, are furloughed or get laid off, your family will still have the coverage they need to survive should you should pass away.
Group life insurance is great especially if your employer is footing the bill, but it comes with drawbacks. This type of life insurance policy is tied to your employment which means if you eventually leave the company, you will no longer have the insurance. Group policies are also typically much smaller, covering about $100k to $200k when most families need a million or more dollars in coverage.
COVID-19 Contactless Underwriting
The COVID-19 crisis has made it easier than ever before to get life insurance. Normally, life insurance requires a medical exam, lengthy application and an underwriter reviews your medical and financial history to determine your rates. Right now is the best time to apply for life insurance and go through the underwriting process because the vast majority of carriers are offering contactless underwriting services where you don’t need a medical exam and all you have to do is apply with an agent and submit electronically.
There are many factors to consider when signing up for life insurance. If you still aren’t sure where to start, contact us to get in touch with one of our agents to help walk you through your options!