Life Insurance Upstate is a practical purchase that can help ensure your loved ones are not financially burdened upon your passing. But it’s important to consider your options before buying life insurance.
A company’s ratings for financial stability, customer service, and policy offerings can all influence your choice of insurer.
The peace of mind that comes with life insurance is the security of knowing that your family’s financial future is secure. Whether you have children who depend on you, debts to pay off or an expensive mortgage, having life insurance can help you cover expenses in the event of your death.
Having life insurance also gives you the opportunity to leave a legacy behind by providing your loved ones with a financial inheritance. Depending on the type of policy you choose, life insurance can also provide you with flexibility in planning your estate. In addition, some policies offer cash value which can be withdrawn or borrowed against, and you can cancel the policy at any time.
A recent survey conducted by Life Happens found that 78 percent of Americans believe that getting life insurance is one way to show their loved ones that they care. Having life insurance helps them prepare for the unexpected, and can reduce stress, so they can focus on what matters most.
When determining how much life insurance you need, start by looking at your family’s current expenses. This should include the cost of your mortgage or rent, utilities, daycare costs, educational expenses for your children and any other recurring expenses. Once you know how much you need, compare it with your income to make sure you have enough coverage.
You should also take into account any outstanding debt, future education costs for your children and any other financial obligations that you would like to pay off in the event of your death. Typically, you will need to purchase a policy that is equal to or greater than 10 times your annual salary. If this feels like a high number, you can always opt for a lower policy amount and simply increase your premium payments as your income increases.
When you are purchasing life insurance, be sure to select a company with a good reputation for customer service and an excellent track record for paying out claims. Investopedia recommends that you ask for quotes from several companies and to compare them carefully. In particular, you should check the insurer’s credit rating to ensure that they are financially stable and have the resources to pay out your benefits in the long-term.
Financial Protection
Having life insurance can provide peace of mind knowing that your loved ones will not have to pay for major expenses when you pass away. The death benefit from your policy will help cover living expenses such as mortgage or rent, credit card bills, car loans, funeral costs and final expenses. If you have children, it can also help fund their future needs such as education or college tuition.
A life insurance policy provides a lump sum of money paid to beneficiaries upon the death of the insured, in exchange for premiums paid during the insured’s lifetime. It is an affordable option to protect your family from financial hardship.
The amount of the death benefit varies according to your chosen coverage, your age, health, and lifestyle, and the insurer’s underwriting classification (e.g., standard, preferred). A portion of your premium goes towards the cost of operating expenses and mortality charges.
You can choose to have a permanent or term life insurance policy or even a combination of both. It is best to consult a professional who can help you decide on the best options for your situation.
Some life insurance policies come with riders that allow you to modify your policy to fit your unique needs. These riders may require an additional fee to activate or use, and their availability varies by provider.
Having a life insurance policy is one of the smartest financial decisions you can make for your family. If you want to learn more about your options and find out if life insurance is right for you, reach out to us today.
Life insurance can be purchased on an individual basis or through group coverage offered by your employer. The most important factors to consider when choosing a life insurance policy are the type of coverage you need, your budget and your long-term goals. The benefits of life insurance can include a tax-free death benefit, financial protection for your family, and the flexibility to change your policy as your needs and priorities change. You can enroll in a life insurance policy during open enrollment or through a special enrollment period after a qualifying life event, such as marriage, divorce, having or adopting a child, changing jobs, or a serious illness.
Tax-Free Death Benefit
Generally speaking, the death benefits paid from life insurance policies are tax-free. This is true for both term and whole or universal life policies. Depending on the payout structure though, there are some situations when a beneficiary might have to pay taxes on life insurance proceeds.
If the death benefit is received as a lump sum, it is 100% income tax-free to the beneficiaries. However, if you withdraw the money from your policy or receive it in installments, interest may be payable. Any earned interest that is paid out to the beneficiary will be taxable as ordinary income.
A common reason for wanting to obtain life insurance is the protection it offers against financial loss. This protection can help a loved one maintain their lifestyle, pay off the mortgage or secure the children’s education. Typically, the beneficiary of the life insurance policy will decide how to use the proceeds of the policy.
You also have the option to borrow against your life insurance policy’s cash value, subject to certain limitations. The amount of the loan is based on your policy’s cash value and premium payments, which are referred to as the “basis“. Whenever you take a policy loan, the basis reduces and any outstanding loans must be repaid when you die. If you don’t repay the loan, your death benefit will be reduced by the outstanding balance and accumulated interest.
The federal estate tax exclusion on life insurance policies currently stands at $12 million, and many states have their own guidelines that can be assessed in addition to the federal limit. You can further protect your estate from taxes by transferring ownership of the life insurance policy to another entity, such as a trust. This can be done by completing the proper assignment or transfer of ownership form provided by your life insurance company.
When you make decisions regarding your life insurance policy, it is important to consider all of your options. For example, you should carefully consider who you want to name as the beneficiary and if you want to include contingent beneficiaries. It is also a good idea to make sure your beneficiaries know what your wishes are so they can honor them after you pass away.
Beneficiary Choices
Beneficiaries are the people or organizations that receive a payout (the “death benefit”) from your life insurance policy when you die. Your beneficiary designation is one of the most important decisions you’ll make about your life insurance.
Most people choose to name their spouse or domestic partner as their primary beneficiary. You might also consider your parents, children, business partners or a favorite charity. If you are concerned about having too many people clamoring for your death benefits, you may want to consider setting up a trust or a custodial account.
You can choose more than one person as a beneficiary, and you can even specify how much of the death benefit each beneficiary should receive. Most people divide their death benefits evenly between the beneficiaries, but you can also set a specific percentage for each. For example, you could say that each beneficiary should receive 30 percent of the total death benefit.
Choosing the right beneficiaries is an important decision, and it’s usually made when you purchase your life insurance. Typically, you will be asked to provide names and Social Security numbers on a form that comes with your policy. You can also change beneficiaries later by requesting the appropriate form from your financial institution and completing it.
You should review your beneficiaries from time to time. If your life experiences significant changes, such as a divorce or the birth of a child, it’s a good idea to reconsider the people you have designated as your beneficiaries.
While you can designate your beneficiaries on a life insurance policy at any age, it’s important to do so while you’re still mentally competent. In the event you’re declared incompetent, it’s impossible to make or change a beneficiary.
If you’re unsure of whom to choose, start by making a list of the most important people in your life. Then, think about how their lives would be impacted by your death and the needs they’d have to meet after you are gone. Also, take into account whether any of your beneficiaries receive government assistance or have debts they’d be liable for.
