Life Insurance in Florida
Life insurance is an essential protection for you and your loved ones, but it can be confusing. You may have heard phrases like "term life insurance" or "whole life insurance" thrown around but are unsure what they mean.
Read on to better understand the different types of life insurance and the importance of selecting the life insurance coverage that is right for you. This is especially important when selecting a life insurance plan for seniors. We serve the entire state of Florida by assisting you in meeting your life insurance needs.
What Is Life Insurance and How Does It Work?
Life insurance is a contractual agreement between an individual and an insurance company. The individual will pay monthly premiums in exchange for payment of a death benefit to the insured's beneficiaries when they die.
Life insurance is similar in concept to car insurance or home insurance. You pay a premium to the insurance company to ensure coverage if a certain event, like a car accident or a water leak, happens. The main difference between these types of insurance and life insurance is that the event covered by life insurance (death) is certain to occur at some point. But life insurance can also come with other benefits (e.g., long-term care, cost-of-living increase, disability benefits, etc.)
When Should I Get Life Insurance?
The most common reason why people get life insurance is for those with dependents who rely on their income or if they have debts - like a mortgage or car payment - that will carry on after you die.
Consider getting life insurance at as young an age as possible. The earlier you secure life insurance the better because younger life insurance applicants generally qualify for lower premiums. Premiums are based on age, gender, and health, and you run the risk of developing health problems that will raise your premium costs as you get older.
Though premiums are lower when you are younger, this doesn't mean that seniors shouldn't consider life insurance. There are a variety of options for senior life insurance, and life insurance could be the path to leaving an inheritance for your loved ones.
How Much Coverage Do I Need?
Life insurance is intended to provide for your beneficiaries after your death. Take time to consider how much money would be necessary to allow your beneficiaries to maintain a consistent standard of living including:
- Debt: Your survivors can use your life insurance to pay off your outstanding debts, including a mortgage or student loans.
- Income replacement: The bulk of a life insurance policy is meant to replace your income to enable your dependents to continue their current standard of living.
A common calculation for life insurance is to secure coverage worth six to ten times your annual salary, but this is a catch-all approach. Discuss your unique financial situation with an expert to determine the appropriate level of life insurance coverage.
Life insurance policies can also help pay for long-term care expenses before the insured passes away, via a long-term care rider. These policies will allow you (the policy owner) to access a percentage of the death benefit of the policy. This is an increasingly common and less expensive alternative to traditional long-term care insurance.
What Are the Different Types of Life Insurance Plans available in Florida?
There are three main types of life insurance: term life insurance, whole life insurance, and universal life insurance (and hybrids of the three). The different policies represent different life insurance investment strategies.
Term Life Insurance in Florida
As its name implies, term life insurance lasts for a designated period of time. The payout only occurs if the individual dies during the specified term. Common term life insurance policies last for 10, 15, or 20 years. Once the designated term has expired, you can choose to renew for another term or allow the policy to terminate. Some insurance companies may allow the covered individual to convert the policy to a whole life policy when the term expires. Learn more about whole life insurance policies below.
If you die during the term of your policy and are current on your monthly premium payments, the company will pay the policy's value to your beneficiaries. If the policy expires before your death, or you do not make your monthly payments, your beneficiaries will not receive payment.
Whole Life Insurance in Florida
Unlike term life insurance, whole life insurance does not expire. The insured will only lose coverage if they stop paying the insurance premiums or surrender the policy. In exchange for guaranteed coverage without expiration, the premiums for whole life insurance are normally higher than term life insurance.
In addition to the death benefit paid to beneficiaries after the insured dies, whole life insurance also has an associated cash value. The cash value is a benefit for policyholders while they are still alive. It earns a modest amount of interest, and the policyholder can use the cash value as a loan or to pay the policy premiums. If—at the time of the insured's death—there are outstanding loans against the cash value, it will reduce the policy's death benefit.
These cash values usually accumulate at a guaranteed interest rate (e.g. 3% or more), so can be seen as a safe, tax advantaged, protected asset.
Universal Life Insurance in Florida
Universal life insurance incorporates flexible premiums and adjustable death benefits. Investment gains from a universal life policy go toward the cash value. Policy owners can withdraw from the cash value (compared to whole life, where cash value can only be accessed via a loan).
Get Started With Your Life Insurance Plan Today
Securing appropriate life insurance coverage is essential to ensure your loved ones are protected after your death. It can also be an investment tool as you prepare for retirement. Talk to an experienced life insurance professional today to prepare a life insurance coverage strategy that makes sense for your life and financial circumstances.
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