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Life insurance can help give your family additional financial security if you pass away unexpectedly. It can provide a payout they can use to cover various expenses and move forward with their lives after your death. Advantages and disadvantages of life insurance include financial protection, peace of mind, and more costly premiums with permanent policies. Let’s take a closer look at the pros and cons of life insurance so you can determine whether applying for a policy is worth it for you.
Life insurance definition
Life insurance is a contract between you, the policyholder, and a life insurance company. In exchange for your premiums, the company promises to pay your beneficiaries a set amount if you pass away while your policy is still active.
Two common types of life insurance plans are term life insurance, which offers temporary coverage for a set term that can range from 10 to 30 years, and whole life insurance, which helps protect you and your family for the rest of your life.
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Pros of life insurance
The most noteworthy pros of life insurance include:1
Financial protection for your family
A major advantage of life insurance is that if you suddenly pass away, your loved ones will be able to file a claim and collect a death benefit. They can use the benefit to help pay for many types of expenses, such as funeral costs, debts, everyday bills, and college tuition.
Reasonable premiums
As long as you’re young and healthy, you can expect premiums that fit most budgets. However, even if you’re older or have some health issues, you may find life insurance to be reasonably priced. Compared to whole life plans, term life insurance is typically less expensive, so this type of policy may be the right choice if you have less room in your budget.
Peace of mind
Once you decide on a life insurance policy, you can gain better peace of mind knowing that your loved ones will have the funds to continue living their lives upon your death. It can help them avoid a significant financial burden.
No medical Questions
In many cases, you can apply online from the comfort of your home or office. Some life insurance companies, like Aflac, may also allow you to forgo underwriting questions, for select life plans.
Choose the Plan that’s Right for You
Life insurance is not a one-size-fits-all product. You can choose the plan that meets your particular budget and goals. There are many types of policies and add-ons available.
Cons of life insurance
Here are several cons of life insurance:
Higher premiums for older policyholders
One disadvantage of life insurance is that the older you are, the more you’ll pay for a policy. This is because you’re more likely to pass away during the policy period than a younger policyholder and will, in turn, cost the life insurance company more money.1
Cash value can have a lower rate of return
Some life insurance policies, like whole life insurance, have a cash value component that grows tax-free. While this may be a plus, there’s no guarantee of high returns. 2
Permanent life insurance can be more costly
If you choose a permanent life policy, such as whole life insurance or variable life insurance, you’ll receive lifelong coverage. The caveat, however, is that your premiums will be higher.2
Tips for getting a life insurance policy
If you’re interested in life insurance, consider these tips:3
Apply for life insurance sooner rather than later
Don’t wait to apply for a life insurance policy. The younger you are, the lower the premiums you may qualify for. As you age, you may develop health problems that increase the cost.
Assess how much life insurance coverage you need
The amount of coverage you need from a life insurance policy depends on your unique budget and goals. But a general rule of thumb is that your coverage should be worth at least 10 times your annual salary.3
Compare policy types
Do your research and explore the various types of life insurance plans at your disposal. Aflac offers term life insurance, which comes with different fixed term coverages and lower premiums, and whole life insurance, which will cover you for life.
Consider riders
Life insurance riders are optional add-ons that can help you enhance your policy and receive additional coverage. A few examples of riders you might benefit from include are a term spouse, a term child or benefit if accident occurs causing death.
Is life insurance worth it?
Whether a life insurance policy is worthwhile depends on your unique situation and needs. If you have children you’d like to help protect financially upon your passing, it’s likely a wise choice. Also, life insurance should be on your radar if you owe several large debts, such as a mortgage or car loan, or would like to help ensure your loved ones have enough money to help cover your end-of-life expenses.
Aflac offers term and whole life insurance
As you weigh the pros and cons of life insurance, you may determine that you can benefit from a policy. By applying for life insurance coverage, you’ll be able to help protect your loved ones and gain some peace of mind.
Aflac’s term and whole life insurance policies can give you extensive coverage, premiums that fit most budgets, and other advantages. If you’re unsure of what type of coverage you should get, contact an agent to discuss your options. You may also request a quote online or call 1-855-782-5850 to go through the quote process over the phone.
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Disclaimer
1 Policygenius - What are the Benefits and Disadvantages of Life Insurance? Updated August 22, 2023. Accessed June 27, 2024. https://www.policygenius.com/life-insurance/what-are-the-advantages-and-disadvantages-of-life-insurance/.
2 SmartAsset - What Are the Pros and Cons of Life Insurance? Updated May 16, 2023. Accessed June 27, 2024. https://smartasset.com/life-insurance/benefits-of-life-insurance.
3 Forbes - Best Tips on How to Get Life Insurance for The First Time. Updated June 10, 2024. Accessed June 27, 2024. https://www.forbes.com/advisor/life-insurance/best-tips-first-time-buyers/.
Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. B60000 series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q6000 group whole life series: In Arkansas, Policy Q60100CAR. In Delaware, Policy Q60200M. In Idaho Policy Q60100CID. In Oklahoma, Policy Q60100co*k. In Oregon, Policy Q60100COR. In Texas, Policy Q60100CTX. Q60000 group term life series: In Delaware, Policies Q60200C. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. 65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO.
Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company.
The life insurance policy described herein contains an optional Accelerated Death Benefits Rider that is intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code. Aflac does not give legal or tax advice. Please consult with a qualified legal, tax, and accounting advisor before engaging in any transaction. In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Not available in NY.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent.
Content within this article is for informational purposes only and does not constitute legal, tax, accounting or medical advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer will have to consider in their benefits decision-making process. This article contains a general overview and is not intended to portray any specific benefits or details of Aflac policies.
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