After your death, your loved ones shouldn’t have to worry about covering funeral and burial expenses, paying everyday bills, or making mortgage payments. The good news is that you can provide them with the financial support they need through a life insurance policy.
What Is Life Insurance?
Life insurance is a type of insurance policy that pays a lump sum to your beneficiaries after your death. This lump sum, also known as a death benefit, can be used to cover a wide variety of expenses, including end-of-life expenses such as funeral and burial costs, tuition payments, personal debt payments, mortgage payments, day-to-day expenses, and more.
There are two main categories of life insurance. Term life insurance provides coverage for a specific time period, usually a length of 10, 15, 20, etc. years. Permanent life insurance provides lifetime coverage and may include policies such as whole life insurance, universal life insurance, and burial insurance.
The cost of a life insurance policy is based on a variety of factors:
- Type of insurance plan
- Tobacco use
- Alcohol use
People in higher-risk categories may pay more for life insurance policies than others deemed low risk.
How Does Life Insurance Work?
A beneficiary is an individual or list of people who can claim the death benefit after you die. When you open a life insurance policy, you agree to make monthly or annual premium payments to an insurance provider.
Most causes of death—including death from illness, disease, homicide, and accidents—are covered under life insurance policies. However, there are a few circumstances in which an insurer may deny the claim, depending on the specifics of your contract:
- When health information is misrepresented or omitted in the application
- When there is a lapse in premium payments
- When the person dies by homicide and the beneficiary is involved in the covered person’s death
- When the individual dies while performing a high-risk activity (like skydiving)
- When the person dies while committing a crime
A suicide clause is another common inclusion in life insurance policies. This clause voids coverage if the person dies by suicide within a certain time frame after opening the policy, usually a period of two years.
Unless the circumstances of death fall into these deniable categories, as long as your policy is active when you die, the provider will provide the death benefit to your beneficiaries.
How to Buy a Life Insurance Policy
There are so many options for life insurance policies, and finding the right one for you and your family may be challenging. Follow these steps to ensure you find a policy that meets your needs:
- Calculate how much life insurance coverage you need
- Research different policies and decide which type you want to purchase
- Choose a trusted life insurance provider
- Submit a life insurance application
- Undergo a medical examination
- Start paying your plan premium
The most important decision is what insurance provider you will choose to purchase coverage from. Look for an insurance company that has experienced life insurance agents, positive customer reviews, and responsive customer service.
Contact the Michigan Life Insurance Experts at Melton McFadden
At Melton McFadden, our experienced life insurance professionals can help you develop an insurance plan that protects your loved ones and gives you peace of mind. We are ready to guide you through the process of choosing a life insurance solution that works best for you and your family.
We’re here for you every step of the way. Contact us today or request a free quote to get started.