Navigating Life Insurance: Understanding Coverage

Life insurance is a critical pillar when planning for the future. Unlike a 401(k) or IRA, which can benefit a policyholder directly, life insurance is designed to financially help those impacted by a policyholder’s death. Life insurance can help ensure your loved ones are left with the means to maintain their lifestyles and cover ongoing expenses if you were to die unexpectedly.

What Is Life Insurance?

Life insurance is commonly used to help loved ones pay for expenses after a policyholder’s death. While policies vary, the average life insurance policy may pay beneficiaries a death benefit (often a lump sum) after a policyholder’s passing. This money can be used for various reasons, including funeral costs, mortgages and other expenses.

What are Term Life and Permanent Life Coverage?

Life insurance policies can vary significantly, but all generally fall within two types:

• Term life insurance may pay a death benefit to beneficiaries if a policyholder dies while the policy is in effect. Term life policies are purchased for set periods, typically 10, 20 or 30 years. There is no cash value, and the policy won’t pay if the policyholder passes away after the term expires.

• Permanent life insurance, in contrast, may last a policyholder’s entire lifetime. While this type of life insurance is generally more expensive, it can offer additional perks beyond its effective length. Permanent life insurance policies may accrue cash value, which policyholders can use while they’re still living. This form of life insurance can also be a valuable tool for wealth transfer.

These are only brief summations of these two types of coverage. Your agent can help explain variations that might suit your needs, such as universal and whole life insurance.

Why Should I Consider Life Insurance?

No matter what stage of life you’re in, life insurance can be essential. It can be invaluable knowing your family will have the financial security to maintain their lifestyle if you pass unexpectedly.

Plan for your family’s financial future today. Your The McLoughlin Agency representative can help assess your financial situation and life goals to recommend a policy that’s right for you. Contact us today to get started.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.