If you live in San Diego, auto insurance isn’t the only type of coverage you might need. Life insurance is another important consideration. Life policies tend to be the most straightforward instruments issued by the insurance industry. The loss that life insurance protects against is inevitable but also unpredictable. We would like to think death will arrive in our later years, but this is not always the case. With life insurance policies, you never have a chance to make a claim. Your beneficiaries will do that after you pass away, and thus you are protecting them against what will be their greatest loss. Although purchasing life insurance is generally considered to be a prudent financial decision, there are pros and cons to consider depending on the type of policy you choose and your individual life goals
To some people, whole life policies may appear to be very expensive when compared to other types of life insurance. The reason for the higher premiums is because the insurer is promising a substantial payment for a loss that your beneficiaries know will happen at some point. You may wish to live longer in the company of your loved ones, but you never know how long you will be around. The certainty of death makes whole life insurance more expensive, which is why you can choose other policies such as term and universal life, which tend to feature more affordable premiums.
Peace of Mind for Families
Regardless of the type of life insurance policy you choose, you will feel at ease knowing your beneficiaries will have some cash available should you pass away unexpectedly. You never know when this will happen, and thus it is important to have at least some level of life insurance coverage. For example, you can choose term coverage that protects you while you are paying off a mortgage so your family is not forced to foreclose or sell their home.
Limited Investment Options
To make life insurance policies more attractive to the public, insurance companies try to offer some savings and investment features that sound enticing. Even with life annuity policies, the range of investment options tends to be very limited and conservative because insurance companies assume a great level of risk knowing death could arrive at any time.
Depending on the type of life insurance policy you choose, your beneficiaries may have to pay taxes when they receive their payout. Whereas term life policies can be subject to considerable taxation, whole life policies offer lump-sum payments of death benefits that are tax-free.
Good Source of Loans
After making regular premium payments for a few years, your credit rating with the insurance company will be good enough to give you access to loan options you have built with your cash value. If you are heading into retirement with limited savings, your whole life insurance policy could be a good source to get quick cash when you need it.
If you’d like to learn more about life insurance, reach out to American Tri-Star today. We are also a leading provider of car, commercial, health, and property insurance in San Diego. To receive a complimentary quote, please call one of our friendly agents at 619-272-2100.