Life insurance takes care of your family in the case of your passing.
There are many types of policies. Here are a few basics of life insurance you should understand.
The application
When you apply for life insurance, the insurance company will ask you questions to determine the price of a policy and whether they can insure you.
One of the first things they will ask you is a rundown of your full medical history, in addition to that of your family. The most important thing that will affect your premiums will be any pre-existing conditions, such as heart trouble or high blood pressure. Your family medical history will also affect your premiums, for example a history of cancer.
The life insurance company will also ask about your lifestyle, and whether you participate in hobbies they consider dangerous. They also will ask if you smoke.
Types of life insurance
Here are the most common forms of life insurance:
- Term life insurance: term life insurance is the most common policy people buy. This insurance lasts for a predetermined term, for example 10, 20 or 30 years. Once that agreed upon term ends you will need to buy new life insurance. Since you will be older at that time, your premium will be higher than your original premium.
- Whole life insurance: Whole life has a savings component as well as a basic life insurance component. Whole life insurance acts as an investment vehicle. Policies are valid for your whole life not just for a set time period as with term. Premiums are also fixed for your whole life so you will not pay more when you are older. Many insurance companies offer you the option to convert to whole life during a term policy.
- Hybrid plans: Policies are available that combine aspects of both term and whole life insurance. For example, universal life will let the policyholder move funds between the insurance and savings parts of a policy and variable life, which allows the policyholder to have control over where their savings are invested. These kind of plans can get confusing so it’s best to discuss the options with your agent.
Filing a claim
In the case of death, a surviving family member will fill out an official claim, which will need to include the death certificate that states the cause of death, the date, and the location. Once the claim is approved, it is paid out in a lump sum to the person listed as the beneficiary.
Policyholders should be aware that claims can be denied. For example, if the insurance company finds out that the insured lied about a pre-existing medical condition or a dangerous hobby, the claim could be denied. Most policies also don’t cover suicide.
Speak with an agent
The variations of life insurance policies can be confusing. The professionals at John B. Wright have the tools and the experience to evaluate your needs and explain your alternatives in simple language and to follow up with you on a regular basis to make sure you and your family are well covered. Contact us here to learn more.
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