Life insurance is a type of insurance policy that provides financial protection to the named beneficiary in the event of the policyholder's death. Generally, if anyone relies on your income for their financial well-being (i.e., a spouse, child, business partner, etc.), consider life insurance. Personal Life Insurance gives you peace of mind knowing that your loved ones will be protected against financial catastrophe if you are no longer here to do so. But how does it work? And how do you know if and what you need?

What is life insurance?

Life insurance is designed to help provide financial security for the policyholder's loved ones in the event of their death, by replacing the income that the policyholder would have provided and helping to pay for funeral and other expenses.

Life insurance is a contract between a person and an insurance company. A person makes regular premium payments toward a policy, and the life insurance company pays a death benefit to their beneficiaries when they pass away. There are two main types of life insurance – term life insurance and permanent life insurance – but options like Whole Life, Return ofPremium and Key Man are available depending on your needs.

Term life insurance provides coverage for a specific period of time, such as 10 or 20 years. If the policyholder dies within the term of the policy, the beneficiary receives a death benefit. If the policyholder does not die within the term of the policy, the policy simply expires and the beneficiary receives nothing. Term life insurance is generally less expensive than permanent life insurance.

Permanent life insurance provides coverage for the entire life of the policyholder. It typically includes a savings component, which allows the policyholder to build cash value over time. Permanent life insurance is generally more expensive than term life insurance.

There are several factors that can affect the cost of life insurance, including the policyholder's age, health, and lifestyle. It is important to carefully consider your life insurance needs and choose a policy that is appropriate for you and your loved ones.

List of coverages

Getting a pre-approval doesn't need to be complicated. At CapCenter, we keep it simple. All you have to do is apply.

Income replacement

Just because you don’t have children does not mean you don’t need life insurance. Your financial responsibilities will fall to your family when you are gone. Life insurance helps replace the income you would usually bring in and helps support your spouse or adult children. Keeping your loved ones living in the way they are accustomed to is an important thing to think about.

Business protection

If you passed away, would your business suffer? There are many complications and financial issues that can arise due to the death of a business owner. A life insurance policy can keep a business moving during tough times. Key person life insurance is payable to the company and supplies money for training and hiring of a new employee. A buy-sell agreement, funded by life insurance, allows the other partners in the business to buy the deceased’s share of the business, which provides money for his or her family.

Family support

The average cost of raising a child, born in 2013, to age 18 is more than $300,000. In 2020, the average cost of tuition, fees, room and board for a private college was $51,412 per year. Having life insurance could secure the future for your children in case of your untimely death. With a life insurance policy, there would be enough income to help pay for everything your child could need while growing up.

Funeral costs

The average funeral costs about $10,000. That high price is for standard things, not unnecessary options or luxurious services. A life insurance policy covers the cost of a funeral. Your family will be able to mourn and reminisce comfortably without the burden of funeral costs.

Protecting retirement savings

Once you retire, you may be living off social security. If you are lucky enough, you could have a pension or retirement fund too. But what if your surviving spouse has been relying on you to fund retirement for the both of you? Premature death of an earner can affect sources of retirement benefits such as Social Security benefits.Life insurance helps support a surviving spouse during his or her retirement.

Mortgage payments

After your death, any outstanding debts and financial obligations do not disappear. Your home is likely the most significant and most expensive asset you own. A mortgage payment is a large burden for a widow or widower to carry. A life insurance policy allows your spouse or children to pay off your outstanding debts and spare them the stress of making monthly payments on the home and car(s).

Auto payments

Many families lease or finance their automobiles these days. If the primary earner in the family were to die, the family could be left with outstanding car payments for years to come. A life insurance policy allows your spouse or children to pay off your outstanding debts and spare them.

The bottom line

It's never too early to start thinking about life insurance.

Unfortunately, any debts or other obligations do not disappear in the event of a death. Life insurance helps soften the blow, allowing your family and loved ones to mourn. Policies start cheap and are fully customizable to what you need. Reach out to CapCenter Insurance today to discuss your options. Overall, homeowners insurance is a financial safety net that can help protect you and your home from unexpected events.