Do you have a family?
Do your children and spouse or partner depend on you to cover the bills and help support them financially?
Then you owe it to them – and yourself – to make sure that you have adequate life insurance and that you understand the various types of individual life insurance policies available.
You may be able to get a family life insurance plan or a group insurance plan through your employer; however, if that’s not the case, you’ll need to get an individual life insurance plan.
Getting life insurance and making sure that your loved ones are protected in the event of your death (especially during your peak earning years) is part of a solid financial strategy.
If you own a business with your spouse or have significant personal assets, you may also want to look into a joint life insurance policy.
What is Individual Life Insurance?
Individual life insurance is a policy that is paid for by one person on a personal basis and only covers that person.
You should be aware that individual life insurance is a separate policy from any life insurance that you get through your employer or as a member of any kind of organization like a labor union.
Life insurance is intended to cover the immediate financial needs of a surviving spouse or family members in the event of the insured’s passing, so if you do not have the option of purchasing life insurance through an employer or if you’re self-employed, you should look into getting individual life insurance.
There are a variety of types of individual life insurance plans.
Why Do You Need Individual Life Insurance?
Do you have a family?
Is there anyone who depends on your income or who might inherit a financial burden in the event of your death?
This sort of life insurance payout or “death benefit” is meant to alleviate the suffering of your children, spouse, or anyone else who depends on your income.
It can help cover the mortgage or medical bills, pay for education, and generally ensures your loved ones are not burdened with debt or forced to sell assets in the event of your death.
How Do You Choose the Right Type of Individual Life Insurance?
If you are looking to purchase an individual life insurance policy, your insurance agent can help you select the right type of plan.
Think about what would happen if your family suddenly lost your income.
How much would be needed to cover daily expenses, pay off the mortgage, cover the costs of future education and job training, and any other expenses that would be necessary to keep your family burden-free.
What is a Joint Life Insurance Policy and Why Might You Need One?
Keep in mind that even if you have an individual life insurance policy, you may also want to get a joint life insurance, survivorship benefits, or “second-to-die” life insurance policy with your spouse.
Even though the names sound morbid, these types of life insurance policies can be extremely helpful if you own a small business or if you want to protect your personal or company assets from inheritance taxes.
Joint insurance benefits pay out when the second person passes away.
How Does Term Life Insurance Work?
There are also two different types of individual life insurance to consider – whole life insurance, which covers you for your entire life, and term life insurance, which covers you for ten, twenty, or thirty years (typically) depending on the policy.
Depending on your age, you will likely be required to have a physical exam so the insurance company can assess your health and risk factors.
Depending on your age and health, you may want to look into getting a guaranteed insurability rider, which is a life insurance rider that allows you to purchase additional life insurance with no underwriting or additional health exams.
Insurance riders in general are additional benefits that go beyond the death benefit. Insurability riders and other riders are generally added at a small cost, but sometimes they are a free benefit that can be included in the contract.
Note that individual term life insurance – and life insurance in general – tends to get more expensive as you get older.
Life insurance in your seventies and life insurance in your eighties is a more complicated and costly option than acquiring an individual life insurance policy in your twenties or thirties – which is why you should look into getting life insurance at a young age, especially if you get married or have a child or children.
What Type(s) of Individual Life Insurance Do You Need?
You should carry some form of life insurance if you have a spouse or children or both.
Even if you are single with no dependents, it can be good to carry life insurance in order to cover funeral expenses and any bills incurred by your death.
Life insurance for parents is particularly important because if something happens to you or your partner, the last thing you’d want is for your family to be worried about finances.
Keep in mind that there are two main types of individual life insurance, whole life insurance and term life insurance.
Whole life insurance typically includes a provision that allows you to borrow against the policy for things like medical bills, while term life insurance is pure insurance meaning you can’t borrow against the policy but you will end up paying a fraction of the total costs over time.
The premiums for 10 year, 20 year, and 30 year term life insurance are lower than the premiums for whole life insurance for that reason.
What Other Types of Insurance Are Related to Individual Life Insurance?
Group life insurance plans, disability and life insurance, and joint life insurance are all similar to individual life insurance, and may provide some of the same benefits.
Be aware that while individual life insurance (whole or term) just covers you, life insurance for the family covers everyone in the family group.
Life insurance might seem complicated and expensive, but it is part of a sound family planning and financial strategy.
Getting individual life insurance, term life insurance, or any other type of plan means you’ll be taking care of your loved ones in the long term – and that might be one of the most important things you can do for them.
Contact ASCO Insurance services to learn more about the best individual life insurance plan for you.