Life Insurance – How Does It Work? 

Insurance can be a valuable investment for many reasons. You’re likely familiar with the idea of insuring your home or car, as well as how health insurance can help you access medical care. But there may also be times when you need to insure your own life. If you have others who rely on you, such as a spouse, children or other family members, life insurance can provide critical financial security should something happen to you. Understanding and acquiring suitable coverage is essential.

What Can Life Insurance Cover?

If you or another insured for whom you may have purchased a policy, such as a spouse or dependent, pass away while a life insurance policy is active, beneficiaries can submit a claim and potentially receive financial aid. These payouts, also known as death benefits, may play a crucial role in surviving family members managing future financial needs and expenses directly and indirectly related to the insured’s passing. Funds are often valuable to help with the following:

• Income replacement

• Remaining debts

• Outstanding medical bills

• Estate taxes

• Funeral costs

• Future expenses (e.g., college tuition and child care)

How Do Different Types of Policies Work?

Life insurance may come in many forms, but can primarily be sorted into the following primary classifications:

• Term life insurance establishes coverage for a specific period, such as 10, 20 or 30 years. If an insured’s death occurs during this time, beneficiaries may be eligible for a payout. These policies are generally more affordable than permanent coverage and may be appropriate for those with expiring financial obligations, such as homeowners with mortgages or parents who want to make sure their children are provided for until adulthood.

• Permanent life insurance can provide ongoing coverage throughout the remainder of a person’s lifetime. As long as premiums are paid and policies remain active, death benefits may be paid out. Additionally, this type of life insurance typically includes a cash value component that can accrue value over time. These funds can often be borrowed against, invested or used to help reduce your premiums, and may be a valuable way to subsidize your long-term savings and financial planning.

Learn More

At Price Insurance, we can help you find the right life insurance policy for you and your family. Contact us today to get started.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.