- Posted by Canopy KC
- On July 18, 2016
- 0 Comments
- benefits of life insurance, choose the right plan, Final Expense Insurance, Term Life Insurance, Universal Life Insurance, Whole Life Insurance
Is life insurance worthless? That’s a good question. Realistically, all life insurance is worthless until you need it, which in turn makes it worth it, right? By true definition life insurance is protection for those who rely on your income in the event of your death. Like any type of insurance, life insurance is only valuable if you have the right coverage and having the right coverage only comes with knowledge. If you find yourself asking if your life insurance is worthless, you may just have a policy that doesn’t fit your individual needs. Keep reading to learn when life insurance is beneficial along with when life insurance IS worthless.
When Life Insurance is Beneficial: Life insurance is a tool that you can use to plan for your loved ones and should be viewed as the foundation for your financial portfolio. There is much more to life insurance than death. In fact, life insurance has several living benefits. There are 4 primary categories of life insurance, each with different inclusion criteria, advantages, and fine print. Premiums for each of these are variable as well as criteria dependent and will not be discussed at great length in this blog.
- Term Life Insurance: Applies coverage for the term you select. Either 10, 20, or 30 years.
- Benefit: The key to your dependents receiving this benefit is death within the term you selected. There is an opportunity to renew, typically at a higher premium, but if you choose not to renew or you die (and didn’t renew) there is no payout or cash value to what you have already invested.
- Whole Life Insurance: Applies coverage for your whole life with an investment fund.
- Benefit: There are two benefits; (1) Death benefit that pays a fixed amount upon death and (2) You can borrow against the cash value without being taxed.
- Universal Life Insurance: Applies coverage for your whole life with a money market (type) investment fund.
- Benefit: Generally speaking, it is the same as whole life coverage with a market rate of return for the cash out option.
- Final Expense: Sometime considered as Burial Expense coverage.
- Benefit: Covers the costs related to end of life.
When Life Insurance is Worthless: As a policy holder there are mistakes that will definitely make any life insurance policy worthless regardless of your health or how much your dependents rely on your income.
- Lying on your application to make yourself appear healthier than you really are will only hurt you and your dependents in the end. Believe it or not, companies that provide the policy’s do their homework on your medical history as well as your family’s medical history. Past tobacco use or a family history of cancer may equal a higher premium but your honesty will guarantee your family’s security in the event of your death.
- Death related to driving under the influence, use of illegal drugs, or suicide may negate your life insurance policy completely or at least generate a longer wait period with investigation prior to any sort of payout. These activities all fall within typical life insurance limitations and exclusions and should be clearly defined in the policy’s clause.
- Purchasing too much insurance cannot only be a financial drain while you are living, but also mature or end prior to your dependents receiving any substantial benefits. Finding an agent that you trust is really the key component. Your life insurance policy should fit your needs, your dependents needs, and your living budget.
The question, “Is life insurance worthless,” is a valuable question with a worthwhile answer. Life Insurance is a personal decision that will benefit your financial portfolio and plan for your dependents’ future with the correct policy. The professionals at Canopy are here to help answer these questions and help you make the right decision. As with all products at Canopy, consultations, quotes, and enrollment assistance is absolutely free.
Disclaimer: This content is considered to be brief for the nature of the content and should not substitute a consultation with a licensed insurance broker like those at Canopy.