How COVID-19 Could Affect Your Life Insurance

by Emma

The coronavirus pandemic has led to a rise in life insurance applications as people worldwide brace to protect themselves and their families from financial fallout. While the fear of contracting COVID-19 is real and natural to want some sense of security, you should only be motivated to buy life insurance if you have a genuine need for life insurance.

There are some essential questions to ask yourself before you buy life insurance:

  • Will your loved ones experience financial hardship in the event of your death?
  • Do you own a home with a spouse or partner based on two incomes?
  • Do you have a co-signer on a student loan who will become responsible for the loan if you die?

Having a life insurance policy in place is intelligent to prevent your loved ones from experiencing a financial fallout. Still, you shouldn’t be motivated by fear of the pandemic to rush out and buy an insurance policy.

 Life Insurance

 

Types of Life Insurance

There are two basic types of life insurance to choose from, term life insurance and permanent life insurance. Term life insurance provides coverage for a set time, usually 10, 20, or 30 years. Once you reach the end of your term, your coverage expires, and there is no death benefit if you die after your coverage expires. Term life insurance is ideal for policyholders who need coverage for specific stages of life, such as when raising a family or paying off a mortgage. Think of term life insurance as an insurance policy that pays your beneficiaries if you die.

Permanent life insurance, which includes universal life insurance, variable universal life, and whole life insurance, provides a policyholder with lifetime coverage. Permanent life insurance policies create a savings account where you can earn a minimum interest or a dividend on a tax-deferred “cash value.” As this cash value builds, you can borrow against it to cover things like insurance premiums, inheritance, estate taxes, or cover the expenses of a lifelong dependent.

Life insurance gives policy owners peace of mind of financial security, knowing that their loved ones will have some kind of financial protection. Before buying a life insurance policy, it’s essential to understand the details of your comparison’s financial products. The type of life insurance coverage, life insurance policy exclusions, pre-existing medical conditions, and premiums all affect the cost of life insurance quotes.

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