Life Insurance Arlington is a safety net that pays out a sum of money when you die. It can help reduce your family’s financial burden, cover existing debt or provide an inheritance.
How much coverage you need depends on your situation and the people who depend on you. A financial professional can help you determine your needs.
Many people purchase life insurance to provide financial security for their loved ones after they die. This can include paying off a mortgage, debts, funeral expenses or other final expenses, providing income to a family after the loss of a breadwinner and covering children’s education costs. It can also be used to leave an inheritance.
Most types of life insurance provide a lump-sum death benefit to the beneficiaries named in the policy upon the insured’s death. Beneficiaries can be one or more individuals or organizations. In most cases, the insured and the policyholder are the same person, but some policies allow for coverage on a non-insured individual when there is an insurable interest, such as business partners or spouses.
Purchasing life insurance often depends on your current and future needs and your budget. A financial professional can help you determine the amount of coverage you need and recommend the type of policy that will fit your situation.
There are many different types of life insurance policies, including term and whole life. Term policies typically have level premiums over a period, such as 10, 20 or 30 years and expire at a pre-determined age (usually 80). Whole life insurance is designed to last throughout an entire lifetime and pays out a death benefit regardless of the insured’s health or other circumstances. Some whole life policies have a savings element or cash value that accumulates on a tax-deferred basis.
Premiums
The premium is the amount of money paid to purchase a life insurance policy. The premium is based on a variety of factors, including the insured’s life expectancy and the insurer’s cost of doing business. Some of the premium goes toward the death benefit, while some goes to the insurance company’s operating expenses. Premiums can be paid monthly, semi-annually or annually.
Generally speaking, the younger and healthier you are when you buy a life insurance policy, the lower your premiums will be. Insurers also take into consideration the amount of debt you may have, such as mortgage or credit card debt, and whether you’re planning to have children in the future, as this can impact the amount of coverage needed.
Some of the other factors that can affect your premium include your medical history and your job and lifestyle, such as high-risk hobbies or a dangerous profession. A preexisting condition that could shorten your life expectancy may also affect your rates, as can your alcohol and drug use.
Certain life insurance policies provide flexibility in the way you pay your premiums, such as a whole life plan that allows you to choose a flexible premium option for the first few years of your coverage and then increases your premium at a later date. This provides a more manageable cost over the long term. Other life insurance policies, such as a universal or variable universal policy, allow you to borrow against your cash value, which can be used to pay your premiums if necessary.
Riders
Many life insurance policies come with riders, which are add-ons that modify coverage in some way. They can cover a wide range of circumstances and options, from accelerated death benefits to waiver of premiums. These features can increase the value of a policy, though they typically cost extra. They can also require additional underwriting and possibly a medical exam.
Generally, you should buy a rider at the same time as your life insurance policy. However, some companies allow you to add a rider after purchasing a policy. You may also have to undergo a medical exam again to qualify for certain riders, such as a guaranteed insurability rider on whole life insurance.
Riders can be useful for people who want to protect themselves against unforeseen events and provide financial support to loved ones in special situations. However, they should be carefully considered and evaluated, as they can significantly increase your premium. It’s best to consult a licensed agent to discuss the benefits of a rider and determine whether it’s worth the added cost for your specific circumstances.
If you’re considering adding a life insurance rider to your policy, contact Policygenius for help from an experienced independent insurance advisor. Our experts are licensed in all 50 states and can walk you through the entire life insurance buying process while providing transparent, unbiased advice. Request your free quote to get started.
Beneficiaries
When you take out life insurance, you can name one or more beneficiaries. They will receive a portion of the policy’s death benefit when you die. The payout can be used by your beneficiaries to pay for funeral costs, debts, children’s education expenses or other costs. Beneficiaries can be people or organizations, like charities and trusts. It’s important to choose someone you can trust. Some policies may limit who you can name as a beneficiary or require that a spouse be named. You also need to consider whether you want your beneficiaries to be “revocable” or “irrevocable.”
With a revocable beneficiary, you can change the name at any time. With an irrevocable beneficiary, you can’t change it unless you get the current beneficiary’s consent or if you transfer ownership of the policy. A financial professional or attorney can help you determine which option is best for your situation.
To make it easier for the insurer to find your beneficiaries, be sure to list them with their full names and Social Security numbers. It’s a good idea to review your beneficiaries every year and after any major life changes, like a birth, divorce or death of a loved one. In addition, you should regularly review your policies to ensure that they still meet your needs.
Lapsing
The lapse of life insurance happens when the policyholder fails to make payments within the grace period. Once the grace period ends, the life insurance contract terminates and the beneficiary no longer receives a death benefit. In addition, if the policy is a permanent one (like whole life insurance), there may be tax implications based on how much the cash value has accumulated over time.
A lapsed life insurance policy can often be reinstated by paying back premiums and possibly interest. However, depending on how long the policy was inactive, the insurer may require a new health questionnaire and/or medical exam. If the health information is significantly different from what was given at the original application, the insurer may refuse to reinstate the policy.
Ideally, to prevent a policy from lapse, a policyholder should set up automatic payments, if possible, so that the life insurance company never misses a payment due to forgetfulness or insufficient funds. Calendar reminders are also a good idea.
Life insurance is a valuable tool that helps protect loved ones from financial hardship. Whether it’s a term life plan that expires or a permanent policy with a growing cash value, a lapse can leave beneficiaries without any peace of mind or financial security. By exploring options for reinstatement and utilizing the grace period, individuals can safeguard their life insurance coverage and keep their families protected.
Cancellation
A major reason for cancelling a life insurance policy is that the policyowner no longer feels they need or want it. This may occur due to a change in financial circumstances or a change in goals and priorities. However, it’s important to consider alternative ways to meet these goals before cancelling your life insurance policy.
For example, if a wealthy family member passes away and leaves you an inheritance, you may decide to invest the money instead of paying for a life insurance premium. It’s also possible that the cost of insurance (COI) increases have made the life insurance premium unaffordable. This is a good reason to speak with your agent or life insurance company about lowering your coverage.
Another common reason for cancelling a life insurance policy occurs when the policyholder finds other investment opportunities that provide a better return. In this case, the policyowner will often cash out their life insurance and receive a lump sum of money from the insurer minus any surrender fees.
Some policies also allow the policyholder to borrow against their cash value, which they can use for living expenses, long-term retirement costs, and other financial obligations. However, the loan must be repaid before your beneficiaries can receive your death benefit. If you decide to cancel your life insurance, make sure to check with your insurer about any cancellation rules or requirements and complete any required paperwork.