Cars have airbags and spare tires, planes have emergency oxygen masks and cushions that turn into floatation devices, and buildings have fire extinguishers in case the place should catch fire. Just as we hope to never have to use these things, it’s nice to know that they are there if we need them. Life insurance is a lot like this! As difficult as it may be to think about passing away someday and leaving our family behind, life insurance can be the perfect way to take care of all your loved ones even when you no longer can.
What is Life Insurance?
Life insurance, at its core, is a way to provide for your family should you happen to pass away young. When you purchase a life insurance policy, you will pay a monthly, quarterly, or annual premium as long as you have the policy. Of course, this can be as long or as short of a time as you would like. Many terms only last a year while others last an entire lifetime. If you pass away during the term of your policy, then your chosen beneficiary will receive a fixed amount of money. Life insurance is not a new development, as even those in ancient Rome left behind funds to care for their loved ones should they pass. This longstanding tradition has benefited many people as they mourn the loss of their loved ones, but get to retain the financial security they had before their loved one passed.
Who Should Get Life Insurance?
To be honest, not everyone needs life insurance. It is mostly beneficial for those who have dependents. We define dependents as children who still live at home or have not yet graduated from college. However, a dependent may very well be anyone who relies on you for financial support, such as a spouse, a sibling, or even a parent. Life insurance was designed for younger people who have families to support since its purpose is to provide what you would have when you’re gone. For someone who works and has children to support, this often means your salary would be the primary source of financial help. If you should pass away, your family will need at least a few years of the same income to make it by. For those of you who stay at home to care for your children, don’t think that life insurance would not benefit you – in fact, this policy might allow you to hire a nanny or a similar caretaker so your spouse can continue working.
When is the Right Time?
Many people choose to get life insurance when it is no longer just themselves who they need to worry about. For example, many people choose a life insurance policy when they get married. Others wait until they are pregnant and will have a family to support soon. If you are unsure when the right time is to consider a policy, you may want to meet with a financial advisor who can guide you on the best time.
Why Hold Onto a Policy?
If you have decided that a life insurance policy is the best choice for you and your family, then you may also be wondering how long you should keep it for. This all depends on your long-term goals, but there are a few benefits to holding onto these policies into retirement. For example, you will be able to provide extra benefits for your spouse in case they may have unexpected medical bills in the future. It can also cover the cost of your funeral and burial so your loved ones do not need to stress themselves about the costs. Another great reason to hold onto your life insurance is to help with your mortgage or other expense. Some policies were designed to be connected to mortgages and help those you leave behind handle any lasting mortgage debt.
How Will my Loved Ones Receive the Benefits?
If you should pass away, your beneficiary would just need to file a death claim with the insurance company, along with a certified copy of the death certificate. Your insurer has up to 30 days to take a look at the claim and respond. Once they take a look, they will either pay it, deny it, or ask you for more information or proof of the death. Once it has been approved, they should pay your beneficiaries within 30 to 60 days of the day your loved ones submit the claim.
Contact Kennedy Financial & Insurance Services
If you would like to learn more about life insurance and how it could help your family, be sure to contact us. We proudly provide financial advisement and care to residents of Calabasas, Northridge, Woodland Hills, and the surrounding areas. Reach out to our professionals today to see how we can help you financially plan for your future.