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Insurance Network Agency
From November to January, I wrote two consumer-based articles and two commercial-based articles every month covering different insurance topics for the Insurance Network Agency. These articles were published in their monthly newsletter for their customers to read.
January 2023 Consumer Newsletter Article 1
You may already have a life insurance policy or starting your journey to choosing a life insurance policy, but choosing one that fits your needs is not easy and may leave you with several unanswered questions like:
How does life insurance actually work?
How does life insurance work upon death?
Does life insurance actually pay?
How long do you pay life insurance before it pays you?
Can I cash in my life insurance before I die?
To start, you pay for a life insurance policy and, when you pass, the policy pays a designated person the amount specified in the policy. This is called the death benefit.
The death benefit typically covers funeral costs, debt, and lost income. Depending on the policy’s setup, the death benefit can expand outside this based on what is specified in someone’s trust.
How does life insurance work upon death?
Upon death, a family member will call in the claim and the funds will be distributed. The insurance agent will likely need a death certificate and life insurance policy number.
Sometimes the deceased may have designated their trust as the beneficiary if they had money set aside for a specific use. The trust should provide instructions on where the funds need to be distributed.
There are three types of coverages to consider: Whole life insurance, term life insurance, and universal life insurance.
When choosing life insurance, you should consider: How long to be insured, the death benefit amount, if the policy builds cash value, and how long you are required to pay for the policy.
Does life insurance actually pay?
Life insurance does pay, but there are some situations when it might not, such as: Death by suicide, an untrue statement was made on the policy’s application, required premiums were not paid, the insured person died during illegal activities, or the policy was through an employer’s group plan and the insured deceased was not working for that employer when they passed
How long do you pay life insurance before it pays you?
How long you pay into life insurance depends on the policy. For some policies, you can choose how long you pay into the policy. You can talk with your insurance agent about what your options are for payment.
If a person covered by term life insurance lives past the coverage period, the policy will not pay out the death benefit.
Can I cash in my life insurance before I die?
Some policies allow you to withdraw your life insurance money since they build a cash value, but this decreases the amount your beneficiary receives.
Planning for the future isn’t easy. Don’t be afraid to ask questions to better understand your life insurance; getting those questions answered is important. Talking to an insurance agent can help direct you to ensure you are covered and protected.