During Life Insurance Awareness Month, the SCC Bureau of Insurance reminds Virginians that there are many things to consider when protecting your loved ones financially with life insurance.
“Life insurance is an important decision when considering your family’s financial future,” said Virginia Insurance Commissioner Scott A. White. “Examine your existing financial resources, debts and other liabilities, and your family’s needs and goals. Shop around and compare prices and coverage.”
If you already have life insurance, review it regularly and update your policy and beneficiaries so that your coverage keeps pace with your changing situation. Life events such as a birth, divorce, remarriage, a new mortgage or new job may trigger a need to update your life insurance policy.
When determining whether to purchase life insurance, consider your existing resources. Does your spouse work? Do you have any sources of income other than salary? Do you have life insurance through your job? Consider the financial obligations that may fall to family members if you die, such as a mortgage, business expenses, car loan or student loan. Also consider short- and long-term goals such as providing care for a loved one, your spouse’s retirement or your children’s education.
Understand the types of life insurance available – term life or permanent – and how benefits are paid if something happens to you. Term life insurance offers death benefit protection for a specific period of time. Benefits are paid only if the policyholder dies within the policy term. Term policies generally have lower premiums, but premiums may increase as you age or at the end of a specific “term.” Term policies do not build cash value, but some permanent life insurance policies such as whole life, adjustable/universal life or variable life insurance do. Permanent policies cover the insured for their entire life as long as premiums are paid when due.
Life insurance can do more than protect your spouse and dependents after your death. Some policies contain benefits that you can use during your lifetime. For example, a policyholder might be able to use the cash value accumulated in a permanent life insurance policy to pay for education, retirement or emergencies.
What you pay for coverage (premiums) depends largely on the type of policy you choose, your health status, age, gender, occupation, family health history and lifestyle. Factors that may affect whether you can obtain coverage and the premium you are required to pay, include: pre-existing and/or chronic health problems such as diabetes, heart disease or cancer; poor health habits such as smoking and excessive drinking; your driving record, and whether you engage in dangerous or risky activities such as rock climbing, motorcycle riding, sky diving, horseback riding or skiing.
The Bureau encourages Virginians to compare premiums, coverage and claims service when considering life insurance options. Contact the Bureau of Insurance in Richmond at 804-371-9741 or toll-free at 1-877-310-6560 to make sure the company or individual offering the coverage is licensed and in good standing. You may also visit the Bureau’s website at https://www.scc.virginia.gov/boi/pubs/lifeguide.pdf for a free copy of the Virginia Life Insurance Consumer Guide.
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