Life insurance is something that everyone needs and few people like to think about. Essentially life insurance helps to protect your family financially in case you were to pass away unexpectedly. Typically both single income and dual income families report that they would face financial challenge if the bread-winner were to die.
Protecting your Family From Financial Distress
In the event that you were to pass away unexpectedly, the life insurance company that you select will give your family a lump sum of money that will help them recover financially and not face as much hardship. One of the biggest worries of most married people, or those who have children, is whether they will be financially taken care of or not.
What Most Families Spend Life Insurance Payouts On
The life insurance payout can be utilized for whatever your family desires, the most common uses of the money include:
- Covering household expenses, bills, and groceries
- Burial expenses or funeral service costs
- Saving for college or educational cost
- Paying off a mortgage or home loan
- Taking care of outstanding car loans
- Investing or saving for retirement
Put in basic terms, life insurance protection is an agreement between an individual and an insurance company that is committed to pay the amount of money stated on the policy, as long as the payments are made and the account is in good standing. The payout amount will usually be a single payment, however it can also be paid out in installments if that is more desirable.
Who is Involved in the Life Insurance Process?
Life Insurance Agent – A state licensed agent who generally works with a wide range of companies and assists the policy owner in choosing the best coverage at the best rate with an insurance company that is reliable and reputable. The agent saves the buyer time and makes the process as seamless as possible.
Insured – The person whose life is being protected. In the event that this individual passes on, it initiates the policy payout. The insured could be the same person as the policy owner, but it could also be someone else.
Policy owner – The person who sets up the policy and pays the premium.
Underwriter – Works for the insurer. Surveys and assesses the accuracy of the application for coverage. They also evaluate the degree of risk and replies with the rating that best applies to the proposed insured, as well as the cost, presented as a specific premium amount.
Insurer – The life insurance company who collects the premiums and pays out the death benefit to the beneficiary when the insured passes away.
Beneficiary – The people or person who will get the payout in case that the insured passes away.
What does the process look like?
The policy owner has a meeting with the life insurance agent, and they have a needs discovery session to assess what coverage, budget, and riders may be needed, as well as answer any questions or concerns regarding the policy.
The life insurance agent sends in the application to the best insurance company that is best for the insurer’s needs.
The underwriter will determine the proposed insured’s health rating category and determine the amount of premium due.
The policy is generally approved the same day in most cases, if there is additional information required it may take 3-5 business days.
As soon as the policy owner submits the first payment, the policy is in full force. The insurance company is committed to providing coverage as long as the premiums are paid as agreed.
When the insured passes away, the beneficiary contacts the insurance company, files a claim, and the policy is now fulfilled.