When you consider getting life insurance, it’s easy to imagine the really bad circumstances of your death and think, You know what? I’ll never need this thing anyway. What you have to remember is that life insurance isn’t meant to pay off when you die; it pays off when you die unexpectedly or under unfortunate circumstances, such as being in a car accident or dying of cancer at a young age.

4 things you should know about whole life insurance

There are actually a lot of misconceptions about whole life insurance. Here are 4 things you should know about it to make sure you’re not paying for more than you need. First, what does life insurance do exactly? Second, how do whole life policies differ from term life policies? Third, why would you want to buy term vs. whole life in any case? And finally, here’s an important caveat that every first-time buyer needs to consider when buying a policy!

 2 important things you should really get to know about whole life insurance: 

1. How much coverage do you need?: It’s important to understand how much coverage you need in any case. Whole life policies typically have a minimum amount of premiums that must be paid, so if you don’t pay your bills for a certain period, it could affect your protection. 

2. How does tax-deferred growth work?: Tax deferral can be a great way to keep more of your money growing within a policy – especially compared to investing outside of a policy where taxes are higher up front and often on distributions as well.

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How whole life works, step-by-step

There are several kinds of life insurance, but we’re going to focus on whole life. With whole life, you pay an annual premium to your provider in exchange for a promise of coverage at set intervals and benefits should you die during that time period. There are three main features of whole life policies: premiums, cash value and death benefits. Here’s how they work.

 If you cancel your whole life policy, or it expires and is not renewed, all cash value in your policy will be returned to you at face value minus any outstanding premiums. While no one wants to think about their own death, having life insurance coverage can make a huge difference for your loved ones financially. That’s why even if you can’t afford a life-changing sum of money for coverage today, setting aside small amounts for that purpose throughout your life can make a big difference down the road. Some employers offer group life policies as a benefit to their employees as well; check with your HR representative or someone in human resources if you don’t see these benefits listed in your employee handbook.

How to buy a policy

The first thing you need to do if you want life insurance is to figure out what kind of policy works best for you and your budget. There are two basic types of coverage: term and permanent. If you don’t have a lot of money to spend, a term policy might be your best bet. A term life-insurance policy covers you for a set amount of time (the term) and pays out when your death benefit runs out. Permanent or whole life policies keep paying out as long as there’s cash value in them—meaning they’re like savings accounts with extra benefits attached—and thus tend to cost more, but if that’s something that fits into your long-term goals, go for it!

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Should I buy whole life or term life?

Life insurance can be broken down into two main categories – whole life and term life. Both provide you with financial security after death but are very different in terms of how they are designed and what they actually do. If you’re unsure which one is better, here’s a breakdown of both options to help you make an informed decision.

6 reasons why people don’t get whole life insurance

People don’t get whole life insurance because they can’t afford it, they don’t have time to see a financial advisor and they think they are too young to need life insurance. That may be true, but what you do need is an estate plan that ensures your family has money should something happen to you. Life insurance can also cover funeral expenses and other related costs of death; for many families, those costs are just as large as their mortgage payments or student loan debts. The key thing here is that people who skip out on life insurance are taking unnecessary risks – not only with their finances but with those closest to them.

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