Whether you’re thinking of getting life insurance or are just curious, you probably have a few questions. “Is it something only older people get?” “what coverage is available?”, “do I get a free PlayStation with my policy?”. Ok, so we can’t answer the last one (though it’s probably a no), but we can respond to the others–and more. So read on for life insurance made easy as we answer your burning questions.
1. Isn’t life insurance something only older people get?
One of the most common misconceptions about life insurance is that it’s only for older people–those well over 40 who want to cover themselves before they reach the seasoned stage of life. After all, why would you need life insurance if you’re younger right?
It turns out that getting life insurance in your younger years could really work out to your advantage. That’s because the older you are, the higher your premiums. So people in their forties and fifties are likely to pay more for their life insurance coverage.
Young and healthy people, on the other hand, pay lower premiums. Life insurance in your twenties and thirties will be considerably cheaper than if you were to get it later in life.
Therefore, you’re likely to be better off investing in life insurance in your younger years. This is especially true if you opt for permanent life insurance (more on that in a bit), as you lock in the premiums and essentially pay the same price at 55 as you would a healthy 25-year-old.
2. Do I need medical testing?
By this point, you’re probably still thinking if life insurance is right for you but may also wonder what’s involved with getting a plan. One of the most important life insurance questions people ask centers around medical testing and if it’s needed for a policy.
The answer is, sometimes. It depends on the individual who applies for insurance, as well as the amount of insurance they apply for. However, as a general rule of thumb, the healthier and younger you are, the less likely it is that you’ll need to go through rigorous medical testing.
You may just have to answer a simple questionnaire. If you’re older and in poorer health, however, then it’s likely that the provider will require more extensive information. Insurance companies need to assess the risk of those they’re insuring, so more due diligence may be required in some scenarios.
3. Aren’t I throwing my money away if I don’t die?
Ah yes, the other one of the life insurance questions. It only pays out when you die, and who wants to think about that? When looking at life insurance as something that only kicks in when you pass, it can feel like a lose-lose situation.
You don’t get anything if you carry on living. But you’re not, you know, dead. So that’s a win. Then again, if you do die, it’s jackpot time, because your loved ones receive a payout. Ah yes, but you’re still dead. It’s a bit like being caught between a rock and a hard place.
While the death benefit if you die is really important and worth its weight in gold, it’s not the only aspect of life insurance. If you get term coverage, then, yes, the payout only comes after you pass away.
But if you get permanent coverage, you’ve got options–and they kick in while you’re still breathing. The game suddenly changes when you find out that having life insurance while you’re still alive means you can also benefit. Now it’s also an investment vehicle.
4. What coverage is available?
There are two primary life insurance options: term and permanent, and the one you choose has a significant impact on the type of life insurance you receive. But what’s the difference between the two?
Term Life Insurance
A term life insurance policy covers you for a specific amount of time, typically between 20 and 35 years. If anything was to happen to you in that time, your loved ones would receive a payout after you’ve passed.
However, should you live through the entire policy (which is the primary goal, right?), you won’t receive a penny. And if you want to renew the policy when it expires, your premiums will increase with your age. Therefore, someone renewing in their fifties or sixties will have to pay a lot more for their new policy than they did their previous one.
Term life insurance can be beneficial if you only want cover for a certain amount of time–say, until your mortgage is paid off in full or your kids finish college. But it literally has no benefits apart from paying out to your loved ones if you pass away.
Permanent Life Insurance
Often referred to as “whole life,” permanent life insurance doesn’t expire. It’s initially more expensive than term coverage, but your premiums don’t change from the first time you take out a policy. So you pay the same premium at 20 as you would 45.
Permanent life insurance also gives you much more than a death benefit. It has a cash value aspect, with the majority of the payments you make on your policy going into a savings vehicle called “cash value.” Over time, your cash value increases and can be accessed later in life.
On top of that, it’s also tax-free. Most investments demand that you pay tax on any earnings. With a permanent life insurance policy, however, you don’t need to worry about paying for tax as it accumulates over time completely tax-free.
That’s because the money you take out (cash value) is loaned from yourself and won’t be subject to taxation. Once you pass, the death benefit–which has also grown over time–pays back the loan, and your loved ones get the rest of the money leftover.
5. Where can I find a policy?
Find your perfect policy by using Amplify. We offer a range of providers and let you compare which options–term or permanent–are best for you and your needs. We’re unbiased, which means there are no agents coercing you to get the deal that gives them the most commission. Instead, you can use our transparent and simple process to get a quote and find coverage that works for you. In other words, life insurance made easy.
In conclusion: Q&A
Life insurance can be a savvy investment that you can get in your younger years and benefit from while you’re still alive later in life. You just need to know which policy is the right one, and hopefully, our life insurance questions can provide more clarity and knowledge so you can make a decision about the best option for you.