Navigating Life Insurance

Insurance

Life insurance can not only provide for your family after you’re gone, but it can also ease financial burdens while you’re still living. Discover the various types of life insurance so you can decide which type is best for you.

The original article contained information found at Texas Department of Insurance.

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How do I know if I need life insurance?

Death can be difficult emotionally and even financially when loved ones struggle to get the money to bury the one they lost. Life insurance can ease that burden by paying medical bills, burial fees, and other debts that remain after you are gone.   

You may want to consider life insurance if you have one of these significant concerns:

Are there different types of life insurance categories?

Yes. There are two major categories: term life and permanent life.

Term life is for a set term or time period, usually from 1-30 years. You pay the same amount for the entire time frame. When you renew, it usually goes up because it is based on your age. When you pass away, the death benefit is a lump sum.

Permanent life is for a form of life insurance that is tied into growth indices, stocks, and bonds. This means that there is a cash value deposited in an account that can later be withdrawn, invested, borrowed, or used to pay premiums. The monthly premiums for this option tend to be higher because of the additional savings feature.

Two common subcategories of permanent life insurance are:

This option is more flexible than the whole life insurance because you can adjust the amount you pay and the death benefits your loved ones will get. The policy won’t cancel as long as your cash value does not reach zero. Each year, your insurance company will give you a report that will estimate the current cash value and the potential duration of the policy. Then, you can talk to your insurance agent to make adjustments as needed.

What factors affect how much I pay?

The amount you pay is a combination of numerous factors, including:

Note: Active military will usually have access to government life insurance.

Am I automatically eligible?

No. Life insurance companies choose whether or not to sell to you based on your health issues, dangerous jobs, or risky hobbies like rock climbing or skydiving. 

How can I customize my insurance?

A few common ways to make sure your life insurance policy meets your needs are:

What if I can’t pay my insurance bill on time?

Most insurance policies have a no-lapse guarantee, or grace period, which allows you to keep your insurance active as long as you pay within 30 days of the due date.

What else can life insurance do besides paying for medical bills and burials?

Some types of life insurance build a cash value and provide several options:

Can I choose how the death benefit amount is paid out?

Yes. The most common option is the lump sum, but other choices include:

How can I tell if I am dealing with a real insurance agent from an actual company?

Both real and fake insurance agents will appear to know a lot about insurance and want to guide you through the process. Real insurance agents use your personal information to gather quotes and provide services, while fake ones commit identity theft. Be sure you’re dealing with a real licensed agent from an actual company by using the Texas Department of Insurance (TDI) tool to  look up an agent or a company.  You can also call the TDI Consumer Help Line at 800-252-3439.

What is a beneficiary?

Beneficiaries are people you want the insurance money, also called the death benefit to go to after you die.

Can I have more than one beneficiary?

Yes, you can have more than one. You will simply need to decide what percentage will go to each one. You may want Aunt Sally to get 55% and cousin Lisa to get 45%, or 75% to your dog Skittles and the other 25% to your favorite charity.  

What is the difference between a primary and a contingent or second beneficiary?

Primary beneficiaries are your first choice to receive life insurance money once you die. Contingent or secondary beneficiaries are another group who serve as backup recipients if primary beneficiaries die before you do.

For example , Steve chose his children Tanya and Joseph as 50-50 primary beneficiaries. He also chose his sister Stella as a contingent or secondary beneficiary. When Tanya and Joseph die in a car accident, his sister Stella is next in line to receive the money Steve originally wanted to give his children.

How do I tell a real sales pitch from a scam?

Scammers are constantly brainstorming new ways to trick people, but they tend to do a few things:

What are insurance scammers favorite ways to target victims?

One of the easiest ways to protect yourself from scammers is to ask lots of questions and research before taking advantage of any offers for them to help.  

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