Disclaimer: Informational statements regarding insurance coverage are for general description purposes only. These statements do not amend, modify or supplement any insurance policy. This website does not make any representations that coverage does or does not exist for any particular claim or loss, or type of claim or loss, under any policy. Whether coverage exists or does not exist for any particular claim or loss under any policy depends on the facts and circumstances involved in the claim or loss and all applicable policy wording.
Most people don’t like to think about their eventual death, or worse yet, what would happen if they died unexpectedly in an accident. A life insurance policy can provide a safety net for your family if the unthinkable happens.
Life Insurance Policies to Consider
Whole Life Insurance - Whole life insurance is a policy that is in force for your whole life. You pay regular premiums, and it pays out to your beneficiaries upon your death.
Term Life Insurance - Term life insurance is a special type of life insurance meant to cover the insured only during a certain period of time. A married couple may carry term life insurance until they pay off the mortgage on their house. If one of them should die, reducing their household income by half, the insurance benefit might be used to pay off the mortgage, so the surviving spouse could stay in the house. Once the mortgage is paid off, the couple no longer needs this insurance.
Universal Life Insurance - Universal life insurance is similar to whole life but allows you to adjust your premiums and benefits over the life of the policy.
Supplemental Life Insurance - Supplemental life insurance is different from the others in that it is a group policy owned by your employer. Upon your death, your beneficiaries would receive a benefit, but it is typically a low amount, insufficient to replace your income for your family. Supplemental life insurance is a good employment benefit because the premiums are usually very low, but if you have this benefit you probably also need additional life insurance.
Understanding Life Insurance
Here are some key life insurance terms you need to know:
The beneficiary is the person or entity that gets the pay out on the policy. There could be one beneficiary or several on the same policy. Multiple beneficiaries can be stipulated to receive different percentages of the policy payout.
Regular payments made to the insurance company to keep the policy in effect are premiums. The premium amount varies based on the terms of the policy.
The insured is the person named in the policy upon whose death the policy will pay out.
The person who owns the policy, generally whoever makes the payments, is the policy-holder. The policy-holder could also be the person who’s life is insured or the policy could be taken out on a spouse or a child.
The benefit is the amount of money the policy will pay out upon the death of the insured.
Cashing Out Your Life Insurance
You’re not planning on cashing out anytime soon, so why not get some cash out of your life insurance policy?
Whole and universal life insurance policies have a cash value, the amount of money the policy is worth at any particular time. This is different from the payout amount. The cash value is the amount of money you could borrow against your policy or how much you would get if you cashed it out.
The cash value of a whole life insurance policy could be used for anything you like, from emergencies to supplemental retirement income. It is important to note that the payout on your policy will be reduced based on the amount of your withdrawals unless you pay the money back into the policy.
How Much Insurance Do I Need?
The amount of life insurance you need is determined by your personal financial picture, income, debts and other financial responsibilities. To learn more about life insurance and get a personalized insurance plan, contact Northern Insuring today.