What Happens to Life Insurance When the Insured Dies?
When you’re young and healthy, it’s easy to cross out a life insurance policy in your to-do list. But you become a parent and you wonder – What happens to my family when I’m gone?
You’ll have peace of mind if you know that the needs of your loved ones are taken care of when you kick the bucket. Your family will have a roof on their heads and your youngest will complete his college.
Only a few have life insurance policy because they don’t consider it important – for you maybe but not for your beloveds.
In reality, it can be a lifesaver, here are some facts about life insurance to make you think otherwise.
Types of Life Insurance
For your car you pay car insurance, for your house you have house insurance, and for your life it’s just right to have life insurance.
Of all the insurance policies this is the least liked, it is about the money left to replace your income for your loved ones in case you die. There are lots of policies in the insurance market that will make your head spin.
It does not have to be that way with these two major types of policy for your life insurance.
Term Life Insurance
Term life insurance is the simplest and most affordable insurance for your money. It serves one purpose to pay your beneficiaries; your spouse, children, and other recipients; a fixed sum if you die.
During the term or period of the policy, the insurance company assumes the financial risk of your death. A policy holder can choosefrom 10-, 15-, 20-, 25-, and 30-years terms.
For instance, a 15-year term life insurance policy has a coverage of $300,000 with a monthly payment for 15 years. If you die within the 15-year, the insurance company will hand your family a check for $300,000 as the death benefit.
Intestacy laws apply if you die without a will. The state will decide how your property will be distributed to heirs such as property, bank account, car, and other assets.
Permanent Life Insurance
Permanent life insurance serves two purposes at the same time; pay your beneficiaries in case you dieand an investment account earning interest for your money. The longer you pay premiums, the more cash your policy has and you can borrow money from the policy.
Permanent life doesn’t expire and continues until you die or stop paying. The amount your family receives, when they will receive the death benefit, and other particulars depend on the policy you secured.
Accidental Death and Dismemberment Benefit
Accidents cannot be prevented and happen at the most unexpected moment. It could lead to an untimely demise or a partial or total dismemberment. The accidental death and dismemberment (AD&D) policy covers a portion of the benefit if you lose a leg and can’t work, and full benefit in case of death.
The policy is easy on the pocket and will bang your bucks. People who work in a hazardous environment qualify for an AD&D insurance that includes heavy machine operators, working in a remote location or driving more than normal.