When you are young everyone stresses to save your money and make wise choices. One of those wise choices should be investing in yourself with a life insurance policy. As an adult, you will begin to take on more responsibilities with each passing year, which means you will have more that needs protecting. Life insurance is very essential to protecting you, your assets, and your loved ones, yet people rarely ever bring it up as a topic of learning and conversation in the youth of today.
This isn’t a topic taught in high-school or even college. Usually, this sort of financial education is learned through family, friends, or the school of hard knocks. In hopes that it’s not the ladder, let’s discuss the different types of life insurance and why life insurance is so important to have.
Let’s Start with the Basics. What is Life Insurance?
Life insurance is a contract between you and an insurance company that protects you and your family in case anything unexpected might happen. In the event of a tragedy, life insurance can help pay any bills or funeral expenses, continue a family business, or finance future needs that might arise. Life insurance policies can cost anywhere from $25 to $150 a month, dependent on the insurance type.
Basically, you are paying a monthly premium and in return you will receive a lump sum of money in case of any life-threatening accidents to help cover expenses such as mortgage, hospital bills, etc.
Term Life Insurance vs Whole Life Insurance
The two main types of life insurance are Term Life Insurance and Whole Life Insurance. Term Life Insurance according to Henry Insurance Service, “provides protection for a specified period of time. If you die within the term period, a death benefit is paid to your named beneficiary.
Protection ends if you are still living at the end of the term period unless you renew the policy.” This would make Term Life Insurance a good choice for anyone who’s coverage needs might diminish over time. Usually, Term Life Insurance policies last for 10 to 30 years and are more inexpensive compared to Whole Life Insurance policies.
According to Henry Insurance Service, “Whole Life Insurance offers permanent life insurance protection with a guaranteed death benefit and premium payments. Premium payments will pay the cost of insurance protection and create a cash value on a tax-deferred basis.” This term “cash value” basically means that a portion of your monthly premium is funneled into a savings account through your Whole Life Insurance policy. After a certain amount of time, you can access the money saved, or cash value, for things like investments or emergencies.
To sum it up simply, the difference between Term Life Insurance and Whole Life Insurance can be compared to the difference between renting a house and buying a house. Just like with houses, Term Life Insurance is like you are renting out a policy, whereas Whole Life Insurance is like purchasing a policy while building equity along the way with cash value.
Why is Life Insurance Important?
Life insurance is of the utmost importance because it will provide financial protection and security for your family in case something unexpected happens to you. If you were to die in an accident tomorrow, you wouldn’t have to worry how your family is going to pay for a funeral, pay bills, or put the kids through school.
Here at Henry Insurance Service, we understand just how important it is to get the best life insurance policy that is custom fitted towards your needs and budget. We represent hundreds of different insurance companies. We can compare coverage and prices offered by these companies to find the best possible policy for you.
Hopefully, this has helped you to understand the basics of life insurance and why it is so important. For more information or to speak to an experienced Insurance Agent, call 225-972-0451 today!