What is life insurance?
TDG Financial has been in the financial advising industry for over two decades. Life insurance is one of the products we specialize in, one thing we have seen a lot of is the lack of knowledge surrounding life insurance. That's why we wanted to start this series of posts, not a bunch of life insurance jargon but actual education.
There are a lot of misconceptions about What Life Insurance is and how it works. Many have questions like What types of coverage are there? How much coverage do I need? and many more. We are going to answer a lot of those later, but let us begin with the first question:
What is it?
In simple terms, life insurance is a contract that provided the worst happens, your family and those who you care about will be taken care of financially. Now that's very broad, we need to understand how that process works.
How it works
A life insurance policy is between two parties. The policy owner and the Insurance Carrier. In exchange for monthly premiums insurance carrier will pay out a death benefit to whoever you designate as the beneficiary. The amount of premium the policy owner would pay is dependent on three factors. 1: The policy owner's age, 2: Their current health condition, 3: The policy owner's gender.
Why is it important?
This isn't a subject a lot of people want to think about. But in all reality, this is a very important matter to keep in mind. Life insurance can help your family financially when the worst happens. How is that so? A recent study by Forbes showed that "On average a funeral can cost anywhere from $7,000 - $12,000". A lot of times families may not have the means to cover that cost. Setting up a life insurance policy could help ensure that those costs would be taken care of without your family having to worry about the financial burden.
There is also the risk for families of losing the primary "breadwinner". Not only are they having to mourn the loss of their loved one, but now they also have to figure out how they are going to pay bills, keep the house, and continue to live on without having to sell everything. That's a lot of added stress that could be solved by setting up a Life Insurance policy. A policy could pay off the needed expenses for a family
Life insurance comes in many types and forms, which leads to many questions. In this post we gave you the bird's eye view, taking one step further into helping educate more people on Life Insurance. In the following weeks, we are going to cover more subjects surrounding Life Insurance. Topics such as Different types of life insurance coverage, How much coverage is needed? What are Beneficiaries and who can they be?