What is Life Insurance? Life insurance is an agreement between you and an insurer. Essentially, the insurer will pay out a fixed sum called a death benefit to the designated beneficiaries in return for your monthly premium payments. Your heirs can then use the cash from the death benefit for whatever purpose they see fit.
Life insurance works similarly to other forms of insurance, such as term insurance. To get full advantage of your policy, you need to have sufficient premium payments. Most people take out life insurance policies on their own without the assistance of insurance brokers or companies. However, there are many advantages to approaching an insurance agent or Madison Life Insurance Company for help. This includes but is not limited to:
* Keeping records – You need to keep good records in case something should happen to you while you are still alive and require your life insurance company to pay out death benefits. Death benefits are tax-deferred until you remove it by passing away. A life insurance company will act as your legal successor. To this end, it needs to keep good documentation about your beneficiaries and death benefit. This ensures that your beneficiaries do not suffer any lapse in payment due to non-payment.
* Obtaining a death certificate – You may also want to get a copy of your death certificate so as to prove your identity. This is needed in certain instances such as applying for Social Security or disability benefits. If your beneficiaries do not have a Social Security number, you may want to consider using a driver’s license or birth certificate instead. This ensures that your beneficiaries receive the proper amount of benefits.
* Shop around – It is recommended that you shop around for life insurance companies prior to signing up for their service. This allows you to determine the premiums and the level of coverage provided by them. Before settling on one, make sure you understand the level of coverage they are offering. In addition, you should consider the financial benefits and reputation of the insurer.
* Review Your Financial Plan – Before getting a life insurance coverage, you should review your current financial plan and try to determine what type of premium payments you can afford. Depending on your family’s income, it may be possible for you to qualify for a low-cost term life insurance plan. In contrast, you can also choose a high-cost whole life insurance plan if your family has sufficient financial resources. If your financial plan does not allow you to choose between permanent and term life insurance, you should consider obtaining both types of policies so that you are covered during your lifetime and your dependents have an adequate source of income.
* Ask Questions – Asking questions to the agent or company who will be providing your coverage is one of the best ways to ensure you get the right policy. For example, some life insurance companies require a medical exam before they will issue coverage. If this is the case, you should inquire about this requirement prior to signing up. You should also inquire about the cost of additional exams that may be required in the future. If you are unsure about these requirements, you should certainly not purchase life insurance coverage.
One thing that is important to remember is that even though you should take time to research your insurance options, you should never undervalue your life. If you do not value it enough to pass away from your policy before it expires, you will not be able to get the benefits from the insurance. Therefore, when choosing your life insurance policy, one needs to value his or her life so that he or she can get the most out of the policy.