Life insurance isn’t the most popular topic to consider. However, if someone depends on you financially and you want to protect them, then it’s a necessity. Simply stated, life insurance ensures your family’s financial security and peace of mind. It provides cash that can be used to pay for expenses after your death.

What Life Insurance Covers

Life Insurance covers most common living expenses, including future, ongoing and immediate expenses such as:  

• Food
• Housing
• Utilities
• Health care
• Funeral & burial costs
• Mortgage or rent
• Car loans
• Credit card debt
• Taxes
• Estate settlement costs
• College costs
• Retirement funds

Who Needs Life Insurance

Do you need life insurance? The answer is most likely, “Yes.” The following need to seriously consider investing in life insurance:

Married/Partnered w/ or w/o kids: Many partners run into financial difficulty without the other earner’s income. Additionally, childcare costs may prove difficult without the other partner’s paychecks.

Single parents: As the sole income, you’ll need to support your child financially when you’re gone.

Stay-at-home parents: Meals, transportation, college costs, and more will need to be accounted for.

Empty nesters: Maintaining your partner’s current lifestyle may prove difficult without life insurance.

Retirees: Depending on your holdings, heirs may be hit with an estate-tax of up to 45%.

Business owners: If you, a fellow owner, or a key employee pass away, life insurance can protect the business.

Types of Life Insurance

In general, there are two categories of life insurance: permanent life insurance and term life insurance. Let’s break down each one:

Permanent Life Insurance: This type of insurance provides lifelong protection – provided you pay the premiums. The policy also accumulates cash value on a tax-deferred basis, which you can use to buy a home, cover an emergency, or supplement retirement income. Due to these additional benefits, initial premiums are higher than what you will pay for term life insurance.

Term Life Insurance: This type of insurance provides protection for a specific period of time, often 10, 20, or 30 years. It makes sense for those who want to be covered for a critical period, such as while your children are in college or until the mortgage is paid off. Term usually provides the most amount of coverage for the lowest initial premium. It’s ideal for those on a tighter budget.

When to review your life insurance

It’s a good idea to touch base with your Ansay & Associates advisor at least once per year – or when a major life change happens. A review can help ensure your coverage is always at the correct level to protect your loved ones. Your coverage may need to be adjusted following events like starting a business, retirement, getting married or having a child.

When life insurance pays out

In the vast majority of cases, life insurance is paid out as a lump sum to the beneficiaries when the policyholder dies. To receive the payout, the beneficiaries need to file a claim with the insurer. They’ll also need to procure the death certificate to process the claim.

How long does it take to receive the check? It varies, but usually between 30 and 60 days. There can be delays in rare instances, such as unusual circumstances around the death. Most policies don’t cover death from homicide or suicide. Other insurers may deny coverage if the policyholder died doing something illegal or lied on the insurance application.