The Basics of Life Insurance

Life Insurance

A Life Insurance policy can be purchased to cover your entire lifetime or you can renew it in increments of one year. This is known as guaranteed renewability. The cash value in your policy builds tax-deferred over time. You can withdraw cash value or cancel your policy and receive a cash value withdrawal, minus a surrender charge.

A life insurance policy can cover major expenses like funeral expenses. It may also be used to supplement your retirement savings. Some policies offer cash value along with death benefits. You must also consider how much money your family will need. Depending on your age, you may not need a whole life policy. A term life insurance policy may be sufficient for your family’s needs during the peak earning years.

You can also obtain a life insurance policy through a broker. Brokers specialize in this type of insurance. In addition, many companies offer free insurance quotes to help applicants find the best policy for their needs. Getting life insurance is a simple process, but the costs can be high. It’s best to consult a legal and tax advisor before buying a policy.

Life insurance is a legally binding contract between an insured and an insurance company. If you die, the insurance company will pay your beneficiaries a lump sum based on the terms of the policy. The death benefit can be used for a variety of reasons, including paying bills, paying off a mortgage, or helping a child go to college. A life insurance policy is a great investment that protects your family and your loved ones’ financial futures.

Life insurance companies use retained asset accounts to store the proceeds of a policy. These accounts are not FDIC insured, but they may be protected by state insurance guaranty funds. If you want to move the money out of the account, you will need to write and deposit checks provided by the insurance company. Currently, the law does not limit the use of retained asset accounts, but a lump sum check should be available to beneficiaries when they want it.

To start a claim, you must submit a death certificate to your insurance company. Some insurers skip the medical exam altogether, while others use a traditional underwriting process, which can take over a month. Once you’ve submitted the claim, your insurance company will pay out the death benefit. The payout will be tax-free and is often received within 30 days.

There are many different types of life insurance. There is term insurance, which is available through your employer, and permanent life insurance. Term life policies last a specified period of time, usually between ten and thirty years. Unlike permanent life insurance, a term policy does not accumulate cash value. The death benefit amount you receive is guaranteed for the life of the policy.