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If you have a family, you want to protect them at all costs. You want to drive the safest car and buy a house in the safest neighborhood. But what are you doing to ensure their financial security?
Life insurance is one of the best ways to secure your family’s future, but choosing the right type and deciding How many buying can be confusing. Read below to learn more about how whole life insurance works and how to purchase a policy.
If you are in the life insurance market, you can start by taking out a free quote so you know exactly what to expect.
What is whole life insurance?
Whole life insurance is a type of permanent insurance policy with two components: a death benefit and a cash value. The death benefit is the amount your beneficiaries will receive if you die while the policy is active.
The cash value is an amount that accumulates in the policy over time. It usually takes years to accumulate substantial cash value. However, once you have a decent cash value, you can cash it out or borrow against it. Some consumers use cash value for emergency expenses. It can also be used for repay the debtdoing household repairs or many other things.
How to buy whole life insurance
The first step is to determine the amount of life insurance you need to purchase. Whole life insurance is usually sold in increments of $50,000 or $100,000, depending on the company. For example, if you need coverage for $325,000, you will typically need to choose between a $300,000 or $350,000 policy.
After deciding the amount of the policy, you can apply for coverage. A life insurance application will include demographic, medical and lifestyle questions. After submitting the claim, the insurance company will conduct its own investigation to verify your medical records.
Once the investigation is complete, the insurance company will approve, deny, delay or counter-offer your claim. If you are approved, you will have a firm deadline to activate the policy and start making payments.
A policy may be declined if you have many underlying health conditions or lifestyle choices that are red flags for the insurance company. For example, if you are currently undergoing cancer treatment or if you go skydiving frequently, your application may be rejected.
If your application is delayed, the insurance company may delay approval for a period of time. This usually happens if you have surgery or another medical procedure planned. Once this event has occurred, you can ask the insurance company to reconsider your claim.
“The counteroffer means they probably found something they didn’t like and are changing the app,” said financial planner Dustin G. Suttle, CFP of Suttle Crossland Wealth Advisors. “That may mean increasing premiums, decreasing face value, or adding exclusions, such as an aviation exclusion for private pilots.”
You can receive a free quote online now to see what you’re entitled to or you can use the table below to start comparing providers.
Who needs whole life insurance?
People who want to leave a legacy to their family can buy whole life insurance. Wealthy families who worry about inheritance tax often buy a policy to protect their beneficiaries. This mainly applies if you donate assets that are difficult to sell but will incur inheritance tax.
“You can use the death benefit proceeds from life insurance to avoid having to sell ownership of this or other assets,” said financial planner Kevin Lao, CFP of Imagine Financial Security. , LLC.
Many people choose to buy term life insurance instead of whole because their family’s financial needs will decrease as they get older. But that’s not true for everyone. For example, if your spouse has a pension that ends when they die – and you rely on that pension to cover your retirement expenses – you may need a whole life insurance policy instead of a temporary policy.
Some parents buy a whole life insurance policy for their children when they are born just in case they later develop a serious illness or condition that makes them uninsurable.