Is Life Insurance Worth It?
Key Takeaways
- Life insurance can be crucial in protecting your family’s future.
- Term life insurance may be worth the cost to get coverage for a specific period of time.
- Whole life insurance can be costly but provides long-term security and growing cash value.
- Policies with no medical exam required are easy to qualify for and can help your family manage final expenses.
No one wants another bill to pay, so it makes sense to question whether life insurance is worth it. You know it’s important to make sure your loved ones have the financial resources they need in case of your death, but navigating life insurance policy options is often overwhelming.
Exploring the coverage and benefits that are available can help you make an informed decision about whether a life insurance policy is worth what you’ll pay in premiums and the time you’ll spend on the enrollment process.
Is Term Life Insurance Worth It?
A term life insurance policy provides coverage for a specific period, typically ranging from 10 to 30 years. Your death benefit only pays out to your beneficiaries if you pass away within that period. Since you will likely (and hopefully) live beyond the end of your policy’s term, there’s no guarantee that your family will ever receive a benefit. However, that coverage can make a huge difference in your loved ones’ financial stability if you do pass away unexpectedly.
How much you pay for term life insurance depends on factors including the length of the coverage, the size of the death benefit, and your health. As part of the underwriting process, which determines your eligibility and sets your premiums, you will likely undergo a medical exam.
Term life insurance is most valuable when aligned with your financial responsibilities. For example, if you have a mortgage on your house, a 30-year term policy will give your family confidence that they’re prepared to continue making payments, even under tragic circumstances.
In some cases, you may be eligible to enroll in a new term life plan when the one you have expires or even convert your coverage to a permanent life insurance policy.
Secure your family’s future with Guaranteed Acceptance Life Insurance.
Contact GoHealth to find coverage that fits your needs.
Is Whole Life Insurance Worth It?
A whole life insurance policy remains active for the rest of your lifetime if you continue to pay the premiums. You generally need to get a medical exam to enroll.
Because these policies don’t expire, premiums tend to be higher than for term life. If the costs fit into your budget, the certainty that your family will receive benefits could be worth the greater expense.
In addition to that peace of mind, a whole life policy has the advantage of building cash value over time. A portion of your premiums goes into a tax-advantaged account that grows at a fixed interest rate. In an emergency, you can withdraw some of these funds or borrow against them, depending on your plan’s conditions. Later in life, when your income is lower, you may have the option to use the cash value to help pay premiums.
Other kinds of permanent insurance plans accumulate interest differently. For example, a universal life insurance policy sets a minimum interest rate, but the actual growth rate varies based on market conditions. Based on your financial situation and risk tolerance, you may want to select an alternative that offers the potential for greater cash value.
Is No Medical Exam Life Insurance Worth It?
Simplified issue and guaranteed acceptance are two types of life insurance that do not require a medical exam. These policies tend to offer more limited death benefits at higher premiums than standard insurance, but it’s easier to join.
Simplified issue policies may be either term life or whole life. To enroll, you answer a questionnaire about your health and lifestyle. Based on your responses and other considerations, your application may be accepted even if you have some medical problems or were denied for other policies.
Guaranteed acceptance life insurance is a type of whole life plan that doesn’t require a health exam or answering a health questionnaire. These policies are often worth the cost for people who cannot access more comprehensive coverage or who want an additional benefit on top of their existing term or whole life policy. Most people between the ages of 50 and 80 can purchase this coverage, regardless of their medical history.
The relatively modest death benefit from guaranteed issue life insurance won’t replace the income from working, but it can be used for final expenses such as funeral arrangements, medical bills, and debts. Like standard whole life insurance policies, a guaranteed issue policy can also accumulate cash value.
Deciding What Coverage Is Right for You
Life insurance is an important investment with the potential to make a major impact on your family’s future. To determine what kind of policy is worth the money, be sure to consider:
- How much of a death benefit your loved ones will need to minimize financial challenges.
- Whether your health status will limit the policies you can enroll in.
- How much you can afford in premiums.
- If you would like a part of your premium to go to a cash value account.
- Whether you anticipate changes in your life that will affect how much insurance you need or can afford.
By exploring your options carefully, you can pick insurance that will provide security and fit into your budget.
Secure your family’s future with Guaranteed Acceptance Life Insurance.
Contact GoHealth to find coverage that fits your needs.
Sources
Cash Value Life Insurance: Is It Right for You?. NerdWallet.