Why You Should Consider Buying Life Insurance Today
Life insurance is a crucial financial tool that can provide peace of mind and financial security for your loved ones. At O1ne Mortgage, we understand the importance of protecting your family’s future, and we’re here to help you navigate the complexities of life insurance. Call us at 213-732-3074 for any mortgage service needs, and let us guide you through the process of securing the right life insurance policy for you.
Your Dependents Count on Your Income
The primary reason to purchase life insurance is to replace your income for dependents who rely on it. Whether you are the sole income earner or contribute significantly to your household’s finances, life insurance ensures that your spouse, children, or other dependents can maintain their standard of living in your absence. Life insurance can cover essential expenses such as mortgage payments, outstanding debts, childcare, and daily living costs, preventing financial hardship for your loved ones.
You Want to Leave Money to Loved Ones
Life insurance can also serve as a means to leave an inheritance for your loved ones. Even if your beneficiaries do not face financial difficulties without a life insurance payout, they can still benefit significantly from it. For instance, a life insurance payout can help a child cover large expenses like college tuition or a home down payment, providing them with a solid financial foundation for their future.
Pay Final Expenses
The median cost of a funeral with burial is $8,300, according to the National Funeral Directors Association. These expenses can be a significant burden for families to bear. By purchasing life insurance, you can ensure that your loved ones do not have to sell assets or take on debt to cover your burial and other end-of-life costs. This financial support can provide them with the time and space they need to grieve without added financial stress.
You Want to Keep Your Business Afloat
If you own a small business, life insurance can be essential to help your business partners continue running the business without financial difficulty. The death benefit from a life insurance policy can be used to cover financial losses or facilitate the transfer of ownership to the remaining business partner(s). This ensures that your business can continue to thrive even in your absence.
To Leave a Legacy
Life insurance can also be used to make a large, lump-sum donation to your favorite cause. In addition to helping those in need, donating your life insurance policy can provide tax benefits for your heirs. This allows you to leave a lasting legacy and make a positive impact on the world, even after you are gone.
Types of Life Insurance
There are two main types of life insurance: term life and permanent life. Each type offers different features and coverage lengths, so it’s important to understand the differences to choose the right policy for your needs.
Term Life Insurance
Term life insurance provides financial protection for your family for a specified period, usually 10 to 30 years. If you pass away during the policy’s active period and are up to date on premiums, term life insurance pays a death benefit to your beneficiaries. Unlike other types of life insurance, term life insurance does not accumulate cash value. Once the term expires, coverage ends unless the policy is renewed. Note that your premium amount may change upon renewal, especially if the term was for a longer period, such as 20 or 30 years. Renewal options may be limited based on factors like your age and health.
Permanent Life Insurance
Permanent life insurance provides coverage for your entire life (or up to age 99) as long as the premiums are paid. It includes a savings component that builds cash value over time, which the policyholder can access through a loan, withdrawal, or by surrendering the policy. There are two main types of permanent life insurance: whole life and universal life.
Whole Life Insurance
Whole life insurance comes with a fixed-rate savings feature that gradually accumulates cash value over time. This savings component contributes to the higher cost of whole life insurance compared to term policies. If your cash value grows equal to your death benefit before your passing, your insurer will terminate your policy and pay out the cash amount. Another distinctive feature of whole life insurance is the ability to borrow from its cash value through a life insurance loan with no credit check.
Universal Life Insurance
Universal life insurance offers more flexibility, allowing you to adjust your premium and death benefit while the policy is active. The cash value in a universal life insurance policy is subject to a variable interest rate that may vary based on market conditions. While flexibility is a major feature of universal life insurance, changes to your premium could cause your policy to lapse early. If your monthly premium is lower than the policy cost, the difference is deducted from your cash value. Your policy could lapse if the cash value drops to zero.
How to Buy Life Insurance
Buying life insurance involves several steps to ensure you get the right coverage for your needs:
- Determine which type of life insurance meets your needs. Decide whether you need coverage for a specific period or your entire life.
- Calculate how much life insurance you need. Consider your income, assets, and debt to determine the appropriate coverage amount.
- Get several quotes to compare. You can buy life insurance from an insurance company, agent, or broker and may need to complete a medical exam for accurate pricing.
- Make your final selection and pay your first premium. You may also enable auto payments so your premium costs are automatically deducted from your bank account every month.
The Bottom Line
Life insurance can be purchased to limit the financial impact your loved ones experience after you pass away. It can also be used to create an inheritance for your heirs or to support your favorite causes. Some insurance providers use a credit-based insurance score to set premiums. If you live in a state where this is allowed, improving a low credit score can decrease your life insurance cost. Consider checking your credit score to see where you stand before shopping for insurance.
At O1ne Mortgage, we are committed to helping you find the best life insurance policy to meet your needs. Call us at 213-732-3074 for any mortgage service needs, and let us assist you in securing your family’s financial future.
