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The passing of a dear family member is a heartbreaking and sad time for families, not to mention stressful. There is pressure to make final decisions concerning the burial of a particular person that we are not ready to say goodbye to yet. Funeral and burial costs can amount up to $10,000 or more.
Whether you lose a parent, a spouse, or a child, there are costs associated with medical bills, mortgages, lost wages, education expenses, and other costs that can add to the burden of the grief you are experiencing. And if that wasn’t bad enough, it takes even more money to move on and do life in a situation that many call a "new normal."
At the AHI Group, we are committed to assisting families in need, giving you financial protection when the unthinkable happens in life. Having a life insurance policy gives you peace of mind to transition after a heartbreaking time of loss.
What Does Life Insurance Cover?
Life insurance is a unique insurance policy, with some types designed to last a certain set of years – 10, 20, 30 – and others designed to last the entirety of your life, so long as you continue to pay your premiums. For some, life insurance is used as a means to provide for a child in the event of an unexpected death before that child is financially independent. For others, it’s a way to create generational wealth in the form of an estate.
Specific coverage for life insurance varies depending on the type of life insurance policy, such as permanent life insurance and term life insurance, as well as the individual terms outlined in each individual. Review your policy documents independently or with the assistance of an agent for deeper understanding of the conditions of your policy and what is covered.
Death Benefit
The main component of any life insurance policy is the provision of a lump sum payment, often referred to as a death benefit, which is provided to the beneficiaries named in the policy upon the insured’s death during the policy period or for a covered cause. The benefit is typically income-tax-free.
Funeral Expenses
For many families, the cost of an unexpected funeral can be significant. Life insurance provides coverage for burial and funeral expenses, which is a financial support that can significantly alleviate the burden on the deceased’s family during an otherwise challenging period.
Debt Repayment
Life insurance payments may be used to pay off the debt’s outstanding debts, from mortgages and car loans to credit card balances and other financial obligations. This helps ensure that the assets of the family are not depleted as a means to settle these debts.
Estate Planning
Permanent life insurance policies may sometimes play a role in estate planning, offering liquidity to cover estate taxes and additional costs associated with transferring assets to named heirs.
What Does Life Insurance Cost?
While term life insurance policies are typically more affordable, costing as low as $25/month, permanent life insurance policies tend to cost a lot more – usually upwards of $50-$100/month. This is because permanent life insurance offers lifelong coverage. Premiums for either option vary based on:
- The person’s age on buying the policy
- The person’s health, including pre-existing conditions
- The person’s family medical history
- The person’s gender
- The person’s occupation and lifestyle
- If the person is a smoker
- Coverage amount and type
- Term length (for term life insurance)
Some insurers will require the prospective insured to undergo a medical exam before making the decision to insure them. In certain cases, pre-existing conditions can render the insured ineligible for coverage. Individuals who have higher-risk profiles may need to purchase specialized policies in order to have coverage, generally for a higher cost.
Quick: Life Insurance FAQs
How much life insurance coverage do I need?
Determining the appropriate amount of life insurance involves considering factors such as your current financial obligations, future expenses, and the financial needs of your dependents. A general guideline is to have coverage that is at least 5-10 times your annual income, but individual circumstances vary. Consulting with an agent can help you make a more precise decision.
What is the difference between whole life and term life insurance?
Term life insurance provides coverage for a set period, usually between 10, 20, and 30 years, and offers a death benefit if the insured passes away during the policy period. On the other hand, whole life insurance provides coverage for the insured’s lifetime, plus it includes a cash value component that grows with time. Whole life insurance premiums tend to be higher than term life premiums.
Is life insurance taxable?
Life insurance death benefits are typically not subject to federal income tax. In the event of the insured’s death, the beneficiaries would typically receive the entire death benefit tax-free. There may be exceptions, such as if the policyholder ends up transferring their policy for value or in the case of the death benefit being paid as an annuity. Reach out to a tax professional if you have questions regarding your specific situation.
Connect with an AHI Life Insurance Agent
Quality life insurance is indispensable, regardless of your location or circumstances. Life insurance isn't merely a financial safeguard; it's a pillar of protection for your loved ones. It provides reassurance and security, ensuring that your family's financial well-being is preserved in times of need. At AHI, we specialize in delivering affordable, tailored coverage to meet your unique needs
If you’re on the hunt for reliable life insurance, then rest easy knowing your search ends here. Our dedicated team of experts are committed to finding you the best coverage and service for your individual requirements. Regardless of if you’re a young professional, someone planning for their family’s future, or anyone in the mix, AHI Group has the expertise and insight you need to tailor a life insurance solution that aligns with your goals. Give us a call today.
