When you enroll in life insurance, you’re given the option as to the policy size you want. This amount that will be released to your beneficiaries is called a death benefit. Some will have a death benefit that is $10,000, while others will be up to $1,000,000.
Your insurer will assess your insurability risk, which helps decide:
The company is more likely to issue a policy if you’re young and healthy. They also look at your lifestyle and will inquire about any dangerous hobbies you may have that could cause premature death. They want to make sure you’ll be able to make premium payments for a long enough time so they can release a death benefit without being at a loss. You will likely have to undergo a physical exam, or at least answer a medical questionnaire. This is known as medical underwriting.
You can be denied a policy if you are at an advanced age and/or have a terminal condition. But there are certain types of life insurance designed for such individuals, so if you’re in this situation, you still have options.
Premiums are calculated according to the following:
You must pay your premiums to retain your policy. If you don’t, your policy will lapse and your loved ones will not get the death benefit.
Life insurance exists in multiple forms, which function differently based on your choice.
A term life policy usually lasts between 10-30 years. It has lower premiums, but once this period ends, you can either let it terminate, renew it, or convert it to a whole life policy. If it ends without any renewal, your loved ones won’t get the death benefit.
Whole life lasts a lifetime. Premiums are higher, but many offer a cash value component, where a portion of your payments goes toward a savings account that builds due to interest or stock index gains. You’ll be able to access these funds yourself, so it can double as a retirement account.
At Alvarado Master Agency, we are by your side. We will help you find the right policy so that you can pass a small fortune without having to worry about making a fortune. By doing this, you’ll ensure that your loved ones will have peace of mind. We can help you make a significant positive impact on those around you, even if you are no longer around.