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Life Insurance 101

Life Insurance Basics

Life Insurance: it’s a contract between you and an insurance company. The insurance company promises to pay a sum to your chosen beneficiary upon your death in exchange for your premium payments.

Uses: Life insurance is used to replace lost income, pay debts, cover final expenses and estate taxes, and create an estate for your heirs.

Coverage Needs: These depend on factors like marital status, family size, financial obligations, career stage, and goals. Your needs may change over time, so regular re-evaluation is necessary.

Affordability: Balancing the cost of coverage with your family’s needs involves considering the policy type, coverage amount, your age, and health. A financial professional can help you select the right coverage.

Contract: A life insurance contract includes legal provisions, your application, and a policy specifications page. It describes the policy, any options and riders, and the conditions, rights, and obligations of the parties.

Policy Types: The two basic types are term life and permanent life. Term policies provide protection for a specific period, while permanent policies provide lifelong protection, with the premium keeping the policy in force.

Beneficiaries: You must name a primary beneficiary to receive the policy proceeds. You can also name a contingent beneficiary. Beneficiary designations should be carefully considered and can generally be changed at any time.

Long Term Care costs are often provided for in some of today's newer life insurance policies.

Deciding how much life insurance you can afford involves considering several factors. The cost of insurance depends on the type of policy, the amount of coverage, your age, and your health. Also, your current and expected future financial situation plays a role. Craig R Schillig can help you choose the right coverage. Contact us below.

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