Beaumont/Port Arthur, Texas Life Insurance Policies


If you're young and in good health, you probably have never thought much about life insurance. But have you ever considered what financial obligations might still exist if you died? In addition to funeral costs and current bills, what about family living expenses, mortgage payments, long-term debt and college costs? The primary purpose of life insurance is to provide resources for all of these expenses.

How does life insurance work?
When a person dies, there are many expenses that will need to be paid. These expenses may include such items as funeral costs, burial expense, current bills and estate taxes. In addition, there may be financial needs the insured would have met if they had remained alive, including family living expenses, mortgage payments, long-term debt and college costs for children. A life insurance policy's primary function is to provide, upon death of the insured, an amount sufficient to pay for any or all of the preceding costs and expenses. Which expenses or costs are to be provided for, and how much money will be needed, is entirely up to the insured.

Are there different types of life insurance I should consider?

Although there are many types of life insurance policies, nearly all are variations of two basic types—term and permanent.

Do I have to die to collect on life insurance?
For term insurance, the answer is always "yes". For permanent insurance, as the "living" benefits accumulate, they may be used to provide funds for financial needs such as loans, premium payments and retirement benefits.

Which life insurance is less expensive— permanent or term?
Since term insurance only provides a benefit if the insured dies during the policy term, its premiums will be the closest to pure death cost. This is why term is the least expensive coverage to buy at younger ages. At older ages, however, the cost of a term policy rises rapidly along with the increasing death cost and may soon become prohibitive for many senior citizens. A term insurance policy's premium will remain the same during the term, and then increase at each renewal. For example, an annual renewable term policy is written for one year at a time, so the premium will generally increase each year. A five-year renewable term policy's premium will remain level for the five-year term, and then increase at the renewal. Once renewed, the policy premium remains level until the next renewal, and so on until the renewal provision expires (typically at age 65), or when the insured either decides the premium has risen too high or the insurance is no longer wanted. Permanent insurance rates are also fixed for the policy term. However, since the policy is permanent, this fixed premium must represent an average death cost over the entire expected life of the insured. The result is that permanent policy rates will often be significantly higher than term rates at the younger ages, but then significantly lower at older ages.

Do you still have unanswered questions about setting up a Life Insurance Policy or questions about your current policy?

Call F.B. Taylor at (409) 729-5551 today!

Reprinted with permission from Trusted Choice®; www.TrustedChoice.com