Protecting our family’s financial future is one of the most loving things we can do for them. And in a time of crisis, especially one that profoundly impacts our lives, like COVID-19, many people have a renewed interest in doing so through life insurance. Yet, they have many questions about life insurance, and look to Physicians Mutual Insurance Company for guidance. Here are some of the top questions on people’s minds.
What’s the difference between term and whole life insurance?
Whole life insurance is coverage you can own your whole life. So, your beneficiaries are guaranteed a payout when you die, as long as premiums have been paid. Whole life insurance costs more, but it builds cash value, which you can borrow against if you need to.
Term life insurance provides coverage for a set period of time. It costs less and does not build cash value.
Ask yourself, “Will someone be impacted financially if I pass away?” Life insurance pays a cash benefit to your family after you’re gone. It can help pay funeral costs. And when you consider the average cost of a funeral today is just over $8,500, according to the National Funeral Directors Association, that money can make a meaningful difference at a time when family members are already under stress and grieving.
Now, with the restrictions on public gatherings, many families are having to find alternative ways to honor their deceased loved ones — like recording services on video, holding a small, private service — or even postponing memorial services for months later. That can heighten stress and extend grieving for families. Life insurance can help alleviate some of the worries.
Is that why most people buy life insurance … to help cover funeral expenses?
That is a major reason. But, life insurance can also help cover ongoing household expenses. It can give your loved ones more time to handle remaining debts and bills, like mortgage, rent and car payments. Yet, as important as that financial protection can be for loved ones, only 55% of Americans have life insurance. More people have car and home insurance. Some people don’t buy life insurance because they think they can’t afford it.
Can I still get life insurance later in life?
Yes. Some insurance companies offer guaranteed acceptance life insurance, meaning there’s no medical exam or health questions to answer. Getting coverage can be as simple as completing an application and making your first premium payment. Also, keep in mind that when you retire and stop working for your employer, your life insurance coverage is typically one of the group benefits that ends. It’s a good idea to think about how you’ll replace that coverage before you retire or leave your job, because you’ll pay a lower rate the younger you are.
What else should I know about life insurance?
Be sure to keep your life insurance beneficiary information up to date. The specific beneficiary designated on the policy is the one who receives the life insurance benefits.
“NFDA Releases Results of 2015 Member General Price List Survey,” For Immediate Release: October 1, 2015, nfda.org, October 1, 2015
“Priorities?” module, lifehappens.org, accessed June 18, 2019
“4 Things Life Insurance Is Not,” by Helen Mosher, lifehappens.org, October 30, 2018
“COVID-19, FAQs, Funerals and Visitations,” NFDA.org