Life insurance can be confusing for many people, but it’s something that everyone should plan ahead for. Do you have a plan for your loved ones if something unexpected were to happen to you? Would your estate be protected? How much protection do you need to cover all your assets? What type of life insurance is right for your goals? These are important questions and can make choosing the right life insurance plan an overwhelming experience. Purchasing a life insurance policy can be an important decision, and these questions should be your top priority.
Also, keep in mind Insurance guidelines can vary by location, so depending on what state you live in, there are localized regulations you need to take into consideration. Let’s take Austin, Texas, for example, to purchase life insurance in Texas; there are some rights and regulations that you should be familiar with. Hopefully, this will explain the basics of choosing the right life insurance policy and will also explain the insurance laws in Texas that will help you make the right decision. This article will help guide you through some of your options.
The Different Types of Life Insurance
Term Life Insurance
Term life insurance will provide life insurance coverage for a specified period of time. This type of policy can also be referred to as “pure life insurance.” Term life insurance is intended to ensure your dependents in the event of your premature death. If something unfortunate were to happen to you during this predetermined period or “term,” your beneficiaries will receive the payout amount determined in the insurance plan. A term life insurance policy has no additional monetary value. Most term life insurance policies are for 10, 20, or 30-year terms. The amount of payout (death benefit) and the policy cost (or premium) will remain the same throughout the entire term of the policy.
Whole Life or Permanent Life Insurance
Permanent life insurance, or whole life insurance, provides coverage for your entire life and also includes an investment value or cash value in the policy. This cash value appreciates slowly over time. It is typically tax-deferred, so you should not have to pay taxes on any gains in the value of the policy. You can actually borrow money against a permanent life insurance policy or surrender the policy for the cash value at the time. However, if you choose to surrender or sell the policy, you will also surrender any further insurance coverage.
Permanent life insurance falls into two categories. Whole life is the most common option for most consumers. The Premiums or costs remain the same for your entire life, and the death benefit or payout and the rate of return on your policy value are guaranteed.
Universal life insurance offers the flexibility of adjusting the payment amount of your monthly premium payments and guarantees a minimum death benefit or payout as long as your premiums are maintained. If you do not maintain the preset minimum premiums, your death benefit may be reduced.
Life Insurance in Texas
Each state carries its own laws and regulations when it comes to life insurance. In Texas, the insurance industry is regulated under Title 17 of the Texas Insurance Code. The purpose of the Title 17 code is to define the claims procedures and policy requirements for the consumer’s benefit and protection in the state of Texas.
One of these protective measures that are required by Texas life insurance policies is a 30-day grace period on late insurance premium payments. During the 30 day grace period, the insurer cannot cancel your policy, and your coverage will continue as long as your account is brought current within the allotted time.
A life insurance company in Texas is also required to begin the settlement process within 15 days of its receipt of a written claim notification. The policyholder should be notified of the status of the claim in writing within 15 days of their receipt of the claim notification.
Expenses to Consider When Searching for Coverage
There can be many unforeseen financial burdens when something unexpected happens, and these burdens can be devastating to your loved ones. A few burdens to consider when deciding which policy is best suited to your needs should be; Income replacement, mortgage protection, education costs, wealth transfer, debt coverage, and final expenses are just a few things you need to consider when making your decision.
Peace of Mind
Purchasing life insurance can be a daunting experience but knowing the specific life insurance rules and regulations of the state you live in is a critical factor in your decision. Whether you are considering a whole life insurance policy or a term life insurance policy, make sure you understand the benefits and coverages of both types of plans to help you find the right policy for you and your family.
When you are ready to purchase life insurance, contact us today!