Life Insurance Greenville SC gives your beneficiaries a financial payout upon your death. This money can be used for funeral costs, mortgage payments, debts, and other expenses. Some policies also build savings.
Life insurance is a good idea for anyone who has dependents or debts to pay off. It can also help with a transition to retirement.
A term plan provides financial protection to your loved ones in the event of your death. It offers a life cover of your choice at affordable premiums, which you can pay for a set period. You can even add riders to extend the scope of your base coverage at a nominal cost.
Choosing the right Policy term is crucial for ensuring your family’s financial security in your absence. Assessing the duration for which you would need such protection is vital, factoring in responsibilities like loan repayments, children’s education and retirement. Choosing a well-matched Policy term and premium paying term ensures that your policy stays active during the period for which you need it the most.
Policy Term and Premium Paying Term are two different aspects of life insurance that often get confused. The Policy Term is the duration for which your policy remains active, while the Premium Payment Term refers to the number of years you are required to pay premiums to keep the policy in force. The Premium Payment Term can be shorter, equal to, or longer than the Policy Term.
If you choose a premium payment term that is shorter than your Policy Term, your policy will terminate when the premium payments are completed. However, some insurers offer a feature that allows you to convert your existing term policy into a permanent life insurance policy without having to undergo a medical exam.
Unlike a term life insurance policy, a permanent policy is guaranteed renewable as long as you continue to pay your premiums on time. Some permanent policies also offer a savings element that grows on a regular basis and earns money market rates of interest. In some cases, the savings accumulate to a level where you can increase your policy’s death benefit, without passing a medical exam.
Premiums
A life insurance premium is the financial fuel that powers a policy, ensuring coverage remains active and benefits remain payable. The amount of the premium varies according to many different factors, including the type of policy and the amount of coverage selected. It is also important to make timely payments, as failure to do so may result in a lapse of coverage and potential voiding of the policy. Some insurance companies offer monthly, quarterly, semi-annual or annual payment options.
The cost of a premium is based on two underlying concepts: mortality and interest. Mortality refers to the likelihood of death, while interest represents a return on investments made with the premium. In addition, the cost of operating expenses and claim payouts are included in the total cost of a premium.
Other significant factors include age and health. Those with certain health conditions are considered riskier to insure, and will often pay higher rates. Information about the applicant’s health is gathered through a medical exam or by looking at their health records. It is a good idea to buy a life insurance policy early, while still healthy.
Another factor affecting premiums is the occupation of the insured. For example, a logger or a pilot will generally pay more than someone in a non-risky job. Insurers will also look at the individual’s hobbies. Some hobbies, like skydiving or racing cars, are considered high-risk activities that can increase the premiums. The same is true for dangerous jobs, such as police officer or firefighter. In addition, a person with a poor credit history or multiple bankruptcies may be charged higher premiums. Finally, smokers will typically pay more for a life insurance policy than nonsmokers.
Riders
Riders are additional benefits that you can add to a life insurance policy. These can provide several kinds of protection and are often triggered by specific events, such as marriage or the birth of a child. The type of rider you choose will depend on your family’s needs and financial circumstances, as well as the type of policy you have. The most common riders include guaranteed insurability, accidental death, waiver of premium, family income benefit, accelerated death benefit, and child term.
A guaranteed insurability rider lets you increase your policy’s death benefit at predetermined intervals without having to undergo a medical exam, though it will likely cost more than the original death benefit. This is usually a good option for those who may need to cover increased expenses or estate tax concerns. It also allows you to purchase coverage in the future without having to go through a full underwriting process.
The loss of a child is always tragic, but it can be even more difficult for the family to deal with financially. The child term rider (or child protection rider) pays an additional amount of money to the family in the event of the death of a child. This can help them pay for funeral and burial costs, as well as any other expenses they might face.
The accelerated death benefit rider is a popular option that gives you the ability to take an early payout from your life insurance policy’s cash value. This is especially helpful in the event of a terminal illness, but it can come with certain conditions and limitations. You should speak to your New York Life agent to discuss this option in more detail.
Cash value
A cash value is an investment component of permanent life insurance that grows tax-free over the course of a policyholder’s lifetime. It’s typically a part of whole and universal life insurance policies that offer a savings account-like component. But the way that the cash value works varies by type of policy. Some policies use a fixed interest rate, while others invest the cash value in diversified sub-accounts and other investments. Some even allow you to customize the return, which could increase or decrease as market conditions change.
When you pay premiums on a cash value life insurance policy, one portion goes toward the death benefit (based on your age and other underwriting factors) and another covers the insurer’s costs and profits. The rest contributes to the policy’s cash value, which can grow based on how much you pay in and the insurer’s investments. The amount of money allotted to cash increases in the early years, while the amount paid to cover costs decreases as you get older.
The cash value of a life insurance policy can be used for a variety of purposes, including paying for an emergency, supplementing retirement income, or paying for a child’s college education. However, you should be aware that it may be subject to taxes when withdrawn or borrowed. It’s also important to know that if you take too many loans or withdrawals from your cash value, the death benefit of your policy will be reduced.
The cash value in a permanent life insurance policy is usually not paid to beneficiaries when you die, but it will revert to the life insurance company. This money will be credited with a death benefit minus any outstanding loans and withdrawals from the policy’s cash value. If you are considering cash value life insurance, talk to a financial professional and a tax advisor before making any decisions.
Death benefit
The death benefit is the sum of money that will be paid to beneficiaries of a life insurance policy after the policyholder’s death. This sum is established when the policy is issued, and can remain unchanged throughout the life of the policy, or may increase over time. Policyholders can also choose to designate contingent beneficiaries, who will receive the death benefit if the primary beneficiaries predecease them. It is important for policyholders to clearly identify their beneficiaries, and to regularly review them and make changes as needed. This is particularly important during major life events, such as marriage, divorce, childbirth, and death.
In order to claim a death benefit, the beneficiary must provide proof of the policyholder’s death and validate their status as a beneficiary. Then, they must fill out some paperwork and wait for the life insurance company to process the claim. This can take a few weeks or months, depending on the policy and claim.
Once the death benefit is paid, the beneficiaries can use it as they wish. The most common option is a lump-sum payout, which can be either delivered by check or wired directly into the beneficiary’s bank account. Other options include a life income with a period certain, which provides a set number of payments for a specified period, and a specific income payout, which gives the beneficiary periodic installments over a defined period of time. The amount earned from each payment is tax-free.
Many permanent life insurance policies come with a cash value component, which accumulates over the lifetime of the policyholder and serves as a savings or investment account. The policyholder can borrow against this cash value, but if they do not repay it, the unpaid amount will be deducted from the death benefit.
