While you may be familiar with what is covered in an auto or health insurance policy, you may not be as knowledgeable about life insurance coverage. It’s important to prepare for the future and ensure your family is taken care of even after you’re gone. Before we discuss what a life insurance policy covers, let’s review what life insurance is.
What is Life Insurance?
A life insurance policy is an agreement you make with an insurance company where you agree to pay a monthly premium in exchange for the insurer paying a specified amount to a beneficiary after you pass away. With life insurance coverage, you and your loved ones are given the peace of mind that, should anything happen to you, they’ll be taken care of financially.
Types of Life Insurance Policies
There are hundreds of different types of life insurance policies available, but most policies fall into three categories: term, whole, or universal.
- Term: This is the simplest, most popular type of life insurance policy. A term life policy lasts for a specific amount of years—usually 10, 20, or 30 years—before it expires. Should you pass away before the term is up, your beneficiaries will receive their death benefit in a lump sum, monthly payment, or annuity.
- Whole: Unlike term life insurance, whole life insurance does not expire. While more expensive than a term life policy, this coverage has a cash value in addition to a death benefit. As you pay your monthly premiums, a certain amount will go into the cash value and accrue interest at a predetermined fixed rate.
- Universal: Similar to whole life insurance, a universal policy has a cash value in addition to a death benefit. However, a universal policy allows you to change the amount of the death benefit and the cash value without purchasing a new policy.
What Does Life Insurance Cover?
A life insurance policy can be used to provide financial protection to your loved ones by covering expenses your beneficiary may have, such as a mortgage, debts, funeral expenses, or tuition costs. Other expenses covered by life insurance include:
- Monthly bills and everyday expenses. This includes rent, mortgage, utilities, or groceries, so your loved ones can continue their way of life even after you’re gone.
- Co-signed debt. The auto or home loan you signed with your loved one doesn’t go away after death. They’re still responsible for paying for it. A life insurance policy can help pay off or down these debts.
- Child or dependent care. Expenses from daycare, after-school programs, and in-home aid can be covered by a life insurance policy.
- College tuition or education costs. Should you have a spouse, child, or sibling going to college, the death benefit can help cover tuition costs.
- Funeral and end of life expenses. Funeral costs can easily reach up to $10,000 and be a huge burden for families. The payout from your life insurance policy can relieve some of that burden.
Find Your Perfect Policy at Miller & Associates
At Miller & Associates, we’re committed to keeping your loved ones financially protected should something happen to you. We provide a number of life insurance policies with comprehensive coverage offered at an affordable price. Unlike other providers, we have access to a wide range of providers and networks that can help you save thousands on life insurance. If you live in Arizona, Texas, or Utah, get started by requesting a free quote or by contacting a Miller & Associates representative today.