Life insurance…it’s one of those things in life that may be comfortable to think about or discuss. After all, who really wants to think about their own demise—be it untimely or natural? The reality of the situation is that if you pass away, your loved ones could face massive financial burden. As the old saying goes: “nothing in life is certain, but death and taxes.”
As a part of our EPIC Insurance Series, we would like to explain the importance of life insurance and why you need to buy it now—if you don’t already have it.
What is Life Insurance?
According to the Office of the Insurance Commissioner of Washington State, life insurance is defined as a legal contract between an individual (aka “policy holder”) and an insurance company. When said policy holder dies during the term of the insurance contract, the insurance company is obligated to pay a pre-determined sum of money (tax-free) to the beneficiaries of the deceased person.
During the term of the policy, you will be obligated to pay a certain amount of money per year (usually broken down into monthly or quarterly payments) to keep the policy valid. While there are many kinds of insurance policies out there. For example, one of the most common is the 20-year term. It states that the insurance company will pay your beneficiaries a pre-determined amount of money if you die within those twenty years. If you don’t die within those twenty years, then the policy expires and you will need to create a new one.
Both you and the insurance company are betting that you will or won’t die within twenty years. No wonder many people choose not to think about it.
Who is Eligible & Who Can Take Out a Policy for Life Insurance?
Each insurance company has their own criteria for who is and who isn’t eligible. However, there are four main factors where an insurance company cannot turn you down:
- Marital status
- National origin
You can take out a policy on yourself, your spouse or your children, if you follow certain rules set forth. Nobody can take out an insurance policy on you, unless you authorize it. Your employer can take out a policy on you, but you must authorize it in writing.
When Should I Buy Life Insurance?
The age you should purchase life insurance depends on your unique situation. For people who are married with children, life insurance protects your dependents if you pass away. However, the number of single people are increasing each year. According to USAA Life Insurance, the number of single people buying life insurance has increased 10 percent compared to a year earlier. The biggest growth was among people in their twenties, which experienced a more than 20 percent increase in life insurance purchases.
When it comes to determining life insurance rates, health is the leading factor, followed by age. Insurance companies do not see much of a risk with this demographic. Essentially, you can avoid the premium spike by planning ahead and getting insured while you’re younger – and healthier.
The bottom line is that “you never know”. When you have dependents and loved ones, you need to take their needs into consideration. If you die, who will cover the cost of your funeral? Who will pay taxes on your property? If you are the sole breadwinner in your family, how is your husband or wife going to support themselves after you pass away?
Evergreen Personal Injury Counsel in Washington State
Life insurance is one of those necessary things in life that nobody likes to think or talk about. However, having a policy goes a long way for peace of mind. If anything happens to you, your loved ones will be taken care of.
If you have any questions on life insurance as it relates to a wrongful death, contact our experienced and qualified attorneys at Evergreen Personal Injury Counsel. Our attorneys have years of experience helping clients get the legal help and advice that they need.