September is life insurance awareness month to make people aware of the importance of insurance needs. Protecting your loved ones if you pass away is important but life insurance can be difficult to understand if you are not familiar with the terminology.
Why do people purchase life insurance?
People purchase life insurance for different reasons but there are several common concerns making people budget for the insurance. The three primary reasons are: 1) to pay funeral and burial expenses; 2) to replace lost income; and 3) to pay off a mortgage. Roughly 51% of Americans want to pay rising funeral costs for peace of mind. Around 34% of American households want to replace lost income, especially when young children are present in the household. If something happens to you, it is important to make sure your spouse can replace lost income to care for your family. Finally, 26% of Americans want to pay off a mortgage. For many people, a mortgage is the largest investment they will make so protecting the investment is important.
What types are available?
There are two kinds of life insurance, temporary and permanent. Temporary, also called term insurance, is active for a period of time and expires at the end of that period. The benefits are paid to beneficiaries if the insured dies during the term period until the age of 95. Many term insurance policies can be converted to a permanent policy. Permanent life insurance is in place regardless of age at death. Permanent insurance builds a value that can be borrowed against, withdrawn or invested. There are also different types of permanent insurance available depending on your needs.
Whether you choose to purchase life insurance is up to you, but protecting your loved ones financially is always a good idea.
The Merdes Law Office has helped injured Alaskans for more than 30 years, it’s who we are. And while we hope you never need us… We’re here if you do.
Source: Health Markets, “Life Insurance 101: All the Basics You Need to Know About“
