Why is Life Insurance so important?

Life Insurance is important to guarantee your family’s financial future

Just as you would plan for your retirement, you should plan for the unfortunate unforeseen event of you passing away.  By doing so, you are avoiding your loved ones from suffering financially, as well as emotionally, when you are no longer there.

What is the best time to purchase life insurance?

The sooner the better. However, there are some life events that should trigger you to look into life insurance or review your current policy.  For example, if you just got married, you purchased a home or had a baby.  These are moments where your financial responsibility goes up exponentially and therefore a life insurance policy would better financially protect your loved ones.

I still remember when my husband and I purchased our life insurance policies.  We were newlyweds and I had just opened my insurance agency.  We had so many plans.  

Among those plans were purchasing a home and having kids.  As an insurance agent, I understood the importance of getting life insurance early on because the two main factors affecting your premium are age and health.

Since we were both young and healthy, I knew it was the best possible time to purchase a policy and at a reasonable premium.

Like most, we purchased our life insurance policies hoping that we never have to use them (at least not until we are old and lived to the fullest), but we felt better knowing that in the event of either of us passed away unexpectedly, we wouldn’t be financially affected as well.

What types of life insurance policies are there?

There are two types of Life insurance:

• Term policies of 10, 20 or 30 years
• Permanent Life policies such as Whole Life or Universal

Term policies will cover for the period you purchase them.  For example, a $250,000 10- year life insurance policy will cover you for 10 years for $250,000.

After those 10 years, you might have the option to keep the policy at a highly inflated premium (term policies will only guarantee the premium for the period to choose to purchase it) or you can convert the policy into a permanent policy.

The benefit of a permanent policy such as the Whole Life or Universal Policies is their “Cash Value”.

“Cash Value” refers to the dollar amount that will accrue on your policy which can later be taken out as a loan or deduction from the death benefit. Usually, cash value won’t accrue till year 4 or 5 of the policy.  It is not immediate. 

Every policy works differently so it is important that you speak to your insurance agent for more detailed information on your policy’s cash value.

Life Insurance policies can be hard to understand.  Again, that’s why it is important to speak to your insurance agent so that they can explain to you in detail all your options.

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Katleen Huybrechts Muñiz  

Insurance Agent

Maximum Insurance Solutions Group

Katy, Texas