A life insurance policy can help ensure your loved ones are taken care of in the event of your absence.
It can also help cover expenses such as a funeral or memorial and/or other debts. Trust Alchemy Insurance to find you an affordable policy from one of our many trusted brands.
There are dozens of reasons why every adult should consider purchasing at least a minimum amount of life insurance, whether it’s whole life, term life or senior life. Life insurance policies can help cover lost income of a wage-earner who has dependents. In other situations, a policy on a person’s life can pay directly for funeral and burial expenses, which can be considerable.
The most common reason people buy a life insurance policy is to replace income and/or to take care of a spouse and children who might be put in a financial bind upon the death of one of the parents. Because the cost of such coverage is quite reasonable for younger adults, it’s a good idea to purchase life insurance policies at an earlier age.
There are many different kinds of policies for life insurance coverage depending on a person’s needs and desires. The most common policies include whole life, term life, and senior life insurance.
Whole life coverage is a good way for those insured to build cash value in a policy as they continue to pay on it throughout their working years. As long as timely payments are made on an active policy, coverage is intact and lifelong protection is offered. The build-up of cash value occurs on a tax-deferred basis, so there’s no worry about increasing tax expenses for the duration of the policy.
Term life policies are offered for a set period of time at fixed rates. It’s the least costly way to obtain a specific, dollar amount death benefit for a specific period of time, typically 10 or more years.
Senior policies are designed with older individuals in mind. This type of insurance covers funeral costs, burial costs, and possibly other debts that the estate might owe when a person dies.
Alchemy Insurance agents can explain how you can obtain a whole life, term life or senior life insurance policy even if you have specific medical problems. It’s a fact that the younger and healthier you are, the lower your rates will be. However, even people with medical problems can usually get a life policy if they are willing to pay higher rates for the same coverage a very healthy person would pay. Insurance underwriters tend to adjust premiums based on expected life spans. While someone with a medical condition like high blood pressure (HBP) might have a shorter life expectancy than someone without HBP, it’s not impossible to get a life policy.
Anyone who has ever gotten life insurance quotes knows that there’s a lot that goes into the calculation. An Alchemy Insurance agent can explain the particular factors that might affect your rates. In general, quotes are based on multiple factors. Those factors include age, weight, overall state of health, the amount of insurance sought, and medical history.
An experienced life insurance agent will collect all of the pertinent data from an applicant and then send the application to the insurance company’s underwriting department. The underwriters use actuarial tables and complex calculations to determine the applicant’s life expectancy based on all of the data at hand.
There are many benefits related to having a whole life, term life or senior life insurance policy. An Alchemy Insurance agent can explain specific benefits for your situation, but in most cases, the advantages of having insurance coverage on your life include:
As an independent agency, Alchemy can shop multiple brands to find the insurance that best suits your needs.
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It's important for anyone who has a life policy to review the details of it with a life insurance agent once per year, at a minimum. In fact, that advice pertains to any type of insurance policies, not just life coverage.
Anyone who encounters a major life event should consider adjusting a life policy at the time of the change. Simply contact the insurance company or the agent directly and speak about what needs to be done in that particular situation. Different events have a varying amount of impact on the policy in question. However, there are some common life events that almost always require a change in life policies. Examples are divorce, separation or marriage, or when a grandchild or child is born.
Other situations that might call for quick attention to the provisions of a life policy:
There are four common tax advantages of life policies, though not everyone is able to avail themselves of all the benefits in every case. Perhaps the best-known advantage of a whole life policy is the ability of the policy holder to enjoy tax-deferred growth. That means that as the cash value of the whole life policy increases over time, that amount is not taxed until the money is actually withdrawn, which might not be for decades.
This provision is one way that life policies can act as a very safe, and tax-deferred way to grow a nest egg for later years.
Second, in many cases life policies allow for dividend payments as long as the dividends paid do not exceed the net amount of the paid-in premiums. In most situations, those dividends are not taxable to the recipient.
Third, it's a tax-free way to take out a cash loan on a policy. As long as the loans are paid back in time, the policy and the coverage are not affected. What's more, the loan is not a taxable distribution to the recipient.
Finally, the holder of a life policy can usually take out the cash value as a tax-free withdrawal at any time. The policy, however, needs to have sufficient cash value and the amount withdrawn cannot be greater than the insured's basis in the policy.
In community property states, the default beneficiary of a life policy is the spouse, unless the spouse gives written permission for someone else to be the beneficiary. In the vast majority of cases, a spouse, child, another relative, a friend or business associate is named as a policy beneficiary.
Keep in mind that it's also completely legal to name an organization as a beneficiary. People often list a non-profit organization or their charity as the policy's beneficiary. Sometimes they list a trust as well.
It's also possible, and somewhat common, to list multiple beneficiaries on a policy. Parents routinely name children, other relatives, and charitable organizations as beneficiaries on a large life policy. Even though people list multiple beneficiaries quite often, it's a requirement to list at least one beneficiary on any policy.
Term life policies carry unique advantages, one of which is low cost. Because term policies don't build cash value during the stated time period, and only pay a death benefit, the premium amounts are significantly lower than for other types of life policies, particularly whole life.
Another advantage of term insurance is flexibility. Consumers can purchase practically any number of years of coverage based on their financial situation, what they want in the form of a death benefit, and what they can afford. For older people who have never had life coverage before, term insurance is sometimes the best way to get adequate death benefits at an affordable price.
Term policies can be renewed in many cases, especially when the insured is still young enough to buy an additional policy for a fixed number of years at a fixed annual premium.