Intown Living

When you buy a life insurance policy, you specify whom you want to receive the policy’s death benefits when you die. The people you specify are called beneficiaries. The primary purpose of life insurance is to help your beneficiaries maintain their standard of living after you die.

Life insurance isn’t an investment. A life insurance policy is generally guaranteed to pay death benefits when the policyholder dies. Investments are risks people take to earn money, although there is also a chance of losing some or all of the investment.

While some types of life insurance include a savings component that can provide retirement income, Texas law prohibits marketing life insurance as an investment or retirement income source. If an agent or company tries to sell you a life insurance policy as a good investment, be careful. Also, don’t confuse life insurance with annuities, which life insurance companies also sell. People often purchase annuities for retirement because they can provide a steady stream of income over a long period of time.

Insurance companies use a process called underwriting to determine which applicants to accept and what premium rates to charge. The company will consider certain risk factors, including your age, gender, medical condition, and whether you smoke. Younger applicants who are in good health and who don’t smoke will generally be charged lower premiums. The insurer expects that these policyholders will live longer and be able to make more premium payments. Older applicants who have health problems or those who smoke can expect to pay significantly more because they’re not expected to live as long.

Some companies may determine that an applicant is too great a risk and may decline to issue coverage altogether. If a company declines to cover you or charges you more for coverage because of your health status or other factors, keep shopping. Different companies have different underwriting guidelines. If you are accepted for coverage at a higher rate, ask whether your premium can be lowered later. Some companies will lower your premium if you maintain good health, give evidence that your health has improved, or change to a less-hazardous occupation.

When purchasing life insurance, be sure to consider your individual circumstances and the standard of living you want for your dependents. If you don’t have anyone depending on you for financial support, you may not need life insurance, or you may only need only enough for your family to pay any financial obligations after you die, such as mortgage or debt.

In summary, the people who depend on you for financial support can be protected by life insurance by replacing some or all of your lost income when you die.

For a life insurance expert that services Houston's Memorial, Tanglewood, Bunker Hill, Hedwig Village, Spring Valley, Piney Point areas be sure to check our Memorial Telephone Directory.