Life Insurance: Who needs it?
Your dependents will be secured as long as you live. But what if you die? How sure are you that their future is secured when you pass away? If you are already having these questions, then you will definitely need to get yourself insured.
What are your options?
Basically, life insurance is a contract between two parties (insured and insurer) with an agreement of securing financial support for the beneficiaries should the insured dies. This contract is called a “policy.” In order for this policy to take effect, the insured will have to pay the premiums until the end of the contract. When the insured person dies, death benefits will be given to the beneficiaries. It is going to be used to handle funeral costs and other necessary expenses that were declared in the policy. There are many types of life insurance, but there are two basic types:
- Term Life Insurance. This is generally one of the most affordable types of life insurance. Term Life Insurance is a policy that covers only a specific period of time such as 5, 10, 20, 25 or even 30 years. It insures the beneficiaries of death benefits when the insured dies. It only goes up to that extent since this policy does not build cash value. The premiums in this policy is less expensive, but no refund shall be made should the insured lives at the end of the term. Refunds will only be possible if the insured avails of a rider – which will cost more money. Unless there will be significant changes in the life and health of the insured, the policy will remain the same until the end of the contract.
- Permanent Life Insurance. This policy entitles the insured to be protected throughout his life. Unlike Term Life Insurance, this policy has more expensive premiums that involve a long term benefit like building equity. If your chosen policy builds equity, it only means one thing – it generates cash value that you can use in case of emergency situations. There are three types of permanent life insurance: whole life, universal life and variable life.
What Would Happen To Your Policy If Your Life Insurance Company Goes Bankrupt?
The Missouri Life and Health Insurance Guaranty Association takes care of your death benefits if your insurance company suddenly declares insolvency. Just like FDIC of banks, the maximum limit of death benefits is $300,000 and the limit for cash value is $100,000. This association will pay for your death benefits if you die.
With all of these awesome benefits in the state of Missouri, you will be more confident to get yourself insured. But make sure to consult your trusted financial advisor and review everything that you have to know about your chosen policy. The Insurance Department of Missouri has a website where you can determine your rights and learn more about life insurance.