Have you ever considered acquiring a Life Insurance policy? While these policies have been a part of the public consciousness for a long time, many individuals need to be more educated on their importance.
Life insurance policies are critical to alleviate potential financial and physical stress for loved ones after the passing of someone near and dear to them. A life insurance policy can help cushion financial blows while families attend to their grief.
Mark Hauser is the Co-Managing Partner of Hauser Private Equity, where he has spent decades developing his skills to help his clients better. Hauser took it upon himself to tackle the Life Insurance Policy debate while better informing his potential clients.
How Does a Life Insurance Policy Work?
Life insurance applicants will be looking for one of two forms of life insurance: term life insurance or permanent life insurance. These policies have more to separate them than they do in common, but they both lead to payouts for beneficiaries upon the execution of the policy.
Exploring the two policies more, Mark Hauser described them below.
Term Life Insurance is a policy that lasts only for a predetermined length of time, typically between 10 and 30 years. Along the way, policyholders will pay premiums that continue their coverage. Should the premium payments stop, the policy terminates. Term Life Insurance can be renewed with the caveat that insurance premiums will rise substantially yearly.
Permanent Life Insurance differs substantially from Term Life Insurance due to its higher private tag. Permanent life insurance is available to the policyholder throughout their life or until they surrender the policy / quit paying premiums. Permanent life insurance offers expanded coverage at the expense of higher premiums.
Steps to Take When Purchasing Life Insurance
There are a multitude of steps that must be taken before a policyholder acquires their policy. Individuals considering acquiring a life insurance policy should follow the steps outlined by the Insurance Information Institute. Along the way, Hauser also advocates conversations with experienced life insurance representatives.
Here are a few steps suggested by the Insurance Information Institute that all potential policyholders should follow.
- Determine the Necessity of Coverage
- How Much Coverage Is Needed?
- Primary Motivation of Coverage
- Do I Need Additional Riders For Added Benefits?
- Shop Around for Best Benefit / Cost Ratio
- Inform Beneficiaries of Coverage
Life insurance policies should be as unique as the individuals and their families pursuing them. Reflecting upon the questions posed by the Insurance Information Institute above can help potential policyholders decide in which direction to take action.