Before we jump to the basic guide to life insurance, you must know that life insurance is designed to help you, your spouse or significant other, your parents, siblings or a loved one when you can no longer afford all-or-nothing life insurance policies and you are still able to pay full premiums.
The Brief Essential Guide to Life Insurance
Life insurance companies are only required to add any additional funds to your policy if you can afford them and they are not required to spend money elsewhere.
If you buy insurance for yourself that does not cover you when you are ill or injured or if you want to be left alone in case you can’t afford to pay for all or part of your life, or you have a life insurance policy with a death benefit, you are not permitted to write down these amounts or the death benefit amount before you die (if this is allowed under your state’s laws).
Why would you want to do this?
This is a good question.
A death benefit may help you and/or your family to pay for medical expenses during a particularly hard time, which increases the likelihood that your loved one will survive to a healthy person.
If we take life insurance premiums into account, however, all-or-nothing policies become quite expensive for life insurance companies to sell (because they now have to pay the price of not insuring all their customers).
Life insurance is an important investment for those who have enough money to pay for it, but it can also be very costly.
If you have the means to buy life insurance but have limited means, having your death benefits deducted from your policy may make life insurance premiums seem more reasonable.
Unfortunately, it’s not always possible to buy life insurance that allows the deductibility of death benefits.
In addition, not all life insurance policies allow for deductible death benefits. Many insurers are not prepared to cover death benefits that are not insured by them.
A life insurance company may be inclined to allow deductibility of certain life insurance claims, for example, if you can have the money to take care of and bury your loved one.
So if you have the funds to buy life insurance and are willing to help pay for the funeral expenses, you should be permitted to deduct money from your policy.
The Death Benefit is the amount of money that is paid to your insurance carrier for your death if you die before you are age sixty-five (this is called the “interim” term).
An insurance company gives you a death benefit if you have died, but you do not.
The law does not specify what constitutes a life insurance claim; it is a matter of common sense and the insurer needs to balance the claim against the benefits granted in case of actual death to the insured.
If the insurers cannot reasonably determine that your death will cost more than the death benefit, then the policies will not usually come to life.
This means that it is a good idea for your survivors to receive a large death benefit as soon as they are ready for it.
If your life insurance policy does not give you enough money to pay for your life insurance premiums, they may have to go back and adjust their policies for your age at death to reflect that you did not reach sixty-five.
They may also reduce your amount of life insurance, or increase your benefits.
Some policies have provisions to pay for one or more pre-disabled people who die after they have attained age sixty.
Death Benefits vs. Premiums
You have been told that if you die, your life insurance company will pay for your life insurance premiums, which often amounts to the same thing, the premiums.
In fact, you are likely to be left with one of two options, according to the law:
- Have your death benefits deducted from your life insurance policy.
- If you can, donate your money to the medical costs of those who are disabled and who are in need.
When is Your Insurance Paid at Death?
Most American families purchase a life insurance policy for their child, but the law does not specify the rules as to what happens if the child dies before the age of eighteen.
If this occurs, it would likely fall into one of the two following categories:
- If the child is under eighteen, the child will be exempt from any insurance premiums if he was covered by a policy at life risk until he turned eighteen.
- If the child is eighteen or older, then he will have to pay up to the maximum coverage limits.
Thus, the child will have to buy a life insurance policy that has a death benefit added to it.
This will likely be a single or two-year term policy.
You should check the name on the policy to see if it is a life insurance policy, the benefits are for the child and the coverage is for life insurance.
You may find that a pre-dis disabled person can have their life insurance and a disability insurance policy at the same time, just as a non-disabled person can have a disability insurance policy and a life insurance policy