Show Loved Ones You Care With Life Insurance

Showing your loved ones that you care is about more than gifts, hugs, and telling them how you feel – it’s also about making their future brighter. Whether it’s helping them with college, teaching them life skills, or helping them with retirement, investing in the future of your loved ones is the gift that will keep on giving.

One of the best ways to care for your loved ones is by having a life insurance policy – this is an act of love and responsibility. Keep reading to learn more about how life insurance can help your family!

Understanding the Role of Life Insurance in Caring for Loved Ones

Greg and Kara have 3 children, a mortgage, two car payments, and a dog. Greg is the primary breadwinner, while Kara works part-time and also cares for the kids and home.

When Greg unexpectedly passes away due to an accident, Kara is left financially responsible for paying the mortgage, buying the groceries, and taking care of the rest of the bills – all on her part-time salary. Without life insurance, Kara has to find a full-time job that pays for all of this, plus the cost of extra child care, all while grieving her husband’s untimely death.

Luckily, Greg had a substantial life insurance policy, allowing Kara and her kids to maintain their current lifestyle even without Greg’s income after his death. This life insurance policy allows the family to grieve without worrying about finding a new job or wondering how they will pay for their next meal. Greg’s life insurance policy is how he continues caring for his loved ones – even after he’s gone.

While it’s not fun to plan for an unexpected death, life insurance can give your family financial security even after you’re gone. This is the best way to relieve them of unanticipated financial burdens resulting from a death while also giving them the emotional benefits that come from being prepared.

Types of Life Insurance Policies to Consider

Many kinds of life insurance can cover your family’s basic needs in the event of an untimely death. Here are some of the most common types of life insurance policies:

Term life insurance

Term life insurance is a more affordable option – it covers a set number of years. As long as your policy hasn’t expired and you’ve paid the premiums, your loved ones will receive a benefit upon your death. With this option, you can lock in your rate for a longer-term period.

At the end of the term, you may be able to renew your coverage at an adjusted rate. However, you can usually only renew on a year-to-year basis, not for an entire term period.

Whole life insurance

This form of permanent life insurance will give you coverage for your entire lifetime. No matter when you pass away, your beneficiaries will receive a benefit – as long as you have kept up on your premiums!

Whole life insurance also includes a savings component – it builds up a cash value over time. This is why whole life is more expensive than term life!

Many people use their whole life policy to borrow against – it’s easy since there’s no credit check approval and a minimal loan approval process. If you pass away before returning the funds, that amount will be withdrawn from the payout to your beneficiaries.

Graded whole life insurance

There are different types of whole-life policies, including graded whole-life insurance. With this type of policy, a scaled death benefit increases to its full amount over 3 to 5 years. In other words, with the graded benefit, a whole life insurance policy starts with a lower death benefit and then gradually increases to reach the entire amount.

If you want a life policy but are older or have preexisting conditions, a graded whole-life policy is likely your best bet. This is an excellent option for people who cannot qualify for traditional life insurance due to health conditions – it’s much easier to get since you don’t need to go through medical exams or meet specific requirements.

Universal life insurance

Universal life is another form of permanent life insurance, giving you coverage for your entire life. This is also known as adjustable life insurance since it offers more flexibility than traditional whole life insurance. You can increase or decrease your death benefit or even adjust your monthly premium within certain parameters.

While a universal policy works a lot like a whole life policy, including the savings component, here’s how it’s different:

The universal policy can grow and eventually result in a no-cost policy, in which all of your premiums will be taken from the existing cash value.
Your interest rate is not fixed. While you’ll have a guaranteed minimum interest rate, the rate at which your cash value grows can change based on market conditions.

Variable life insurance

Variable life insurance is riskier than the other kinds of life insurance on this list. There are two components of a variable life policy:

A variable cash value: Based on the performance of your selected investments, this cash value can rise and fall. However, this cash value can also be part of your death benefit, unlike with standard whole life insurance.
A face-value death benefit: Just like other forms of life insurance, you will get a fixed death benefit, which will be paid out to beneficiaries once you pass away.

Final expense life insurance

Also known as funeral insurance, final expense life insurance is meant to cover end-of-life expenses like burial costs, outstanding debt, or medical bills. As a result, this coverage has a lower payout than most other kinds of life insurance since it is only meant to cover certain kinds of expenses.

On the other hand, final expense life insurance is often easier for older adults to qualify for than life insurance with age or health requirements. This policy operates like a whole-life policy – it builds value at a fixed rate over time.

Benefits of Whole Life Insurance

If you want to make sure your family is fully covered in the event of your death, no matter what, whole life insurance is the best option. Here’s why:

Guaranteed cost: Whole life insurance is great because your premium costs will never increase. Over the long run, your premiums will feel much more affordable, especially into your elderly years.
Fixed benefits: You’ll also get fixed benefits in addition to fixed costs. This means that your loved ones are guaranteed to get this amount after you pass away, giving you peace of mind that they will be taken care of.
Tax benefits: A whole life policy is a great way to let your cash value grow tax-free. Not to mention, the sum you leave your loved ones will also be tax-free. It’s a win-win.
General peace of mind: This policy will give you and your family more security, especially as you enter old age. As long as your premiums are paid, your family will receive the agreed benefit without your costs increasing over time.

While whole life insurance can be challenging to obtain due to age or health conditions, a guaranteed issue policy is a great option. This way, you can get life insurance without having to undergo a medical exam. Many insurance companies sell these policies based on the best price for your age bracket. You can learn more by visiting the AIG guaranteed issue whole life brochure!

Steps to Choose the Right Policy for Your Family

So, how do you choose the right life insurance policy for you and your family’s needs? Follow the steps below!

Assess your family’s financial needs and goals: Many experts recommend getting a life insurance policy covering 10 to 15 years of your annual income. This means that the first thing you should do is determine your yearly income, plus your spouse’s income. Calculate your family’s annual expenses, if your spouse could cover all of it with their income, and how much the life insurance would need to supplement these costs. You should also calculate existing debts like your mortgage, student loans, and car payments to get an idea of the bigger financial picture.
Comparing options: After determining your family’s overall life insurance needs, it’s important to compare different insurance options. For example, if you can only afford a small monthly premium, maybe a term policy is best for you. Or, if you’re an older adult who wouldn’t qualify easily for life insurance, you might want to consider a guaranteed issue) policy.
Consult with professionals: If you have questions or concerns or simply want to learn more about your options, it’s always a good idea to consult an insurance professional or a financial advisor. You can also spend some time reviewing materials like the AIG guaranteed issue whole life brochure or other free available resources!

Tips for Communicating Your Plan with Loved Ones

Whether you’re married with children or growing older with your spouse, it’s essential to communicate your end-of-life plan with the people you love. Although this can be an awkward conversation, here are some tips to make it easier:

Choose the right place and time: Schedule this conversation in advance, and make sure it’s in a place where you won’t be interrupted and everyone will be fully present and engaged.
Start with empathy: Acknowledge that conversations and end-of-life care can be uncomfortable, but share that you want to provide your loved ones with security for the future, no matter the outcome.
Share your motivation: Explain that you want to help your family avoid future stress, and this is a way of being proactive. Discuss how life insurance can help your family cover final expenses and build wealth.
Bring documentation: Based on your conversations with insurance professionals and financial advisors, share the policy details and what your loved ones can expect as the beneficiary.
Involve key decision makers: Your spouse and adult children should always be part of these discussions!
Share where to find important documents: Adult children are often in a difficult position after their parents pass, not knowing essential passwords, where to find policy papers, or how to contact insurers. Make a folder for them detailing every password, account information, contact information for the insurance company, and next steps.

Long-Term Impact of Planning Ahead

As you speak with your loved ones about your end-of-life plan, you should emphasize the long-term impact of planning ahead. Here’s what your loved ones need to know about how this will benefit them:

They will have financial stability for future generations. A life insurance policy will ensure your loved ones are not left grappling with financial burdens like funeral expenses, medical bills, or unpaid debts as they also grieve your death.
Life insurance will help them preserve wealth and assets. Proceeds from your life insurance policy can prevent your family from selling assets, like a home or business, to cover necessary expenses.
It will reduce emotional stress during a difficult time. Losing a loved one is emotionally overwhelming, and financial concerns can add to that stress. Life insurance gives them a buffer, allowing your family to focus on healing rather than worrying about expenses and bills.

Conclusion

Life insurance is a selfless act of love or care. While no one enjoys thinking about dying or what their family will do after they are gone, planning for the future can pay off big time for your family. Be sure to explore all your options, whether it’s a term life policy, guaranteed whole life policy, or new state-regulated life insurance programs.

At Think Life, we’re here to help you weigh all your options and determine which one is right for you. Our staff is here to answer every question, and we are here every step of the way! Caring for loved ones goes beyond words—click here to take action today.

Frequently Asked Questions

What is the downside of life insurance?

The one downside is that the older you are, the more you’ll pay for your policy. However, even with a high premium, the costs are worth it since your loved ones will benefit from this as they grieve your death.