7 Key Features of Life Insurance

7 Key Features of Life Insurance You Need to Know

By: Matador Capital Partners

Life insurance is a crucial component of your financial wellness as it provides financial security to your loved ones in the event of your sudden demise. It can cover your mortgage, living expenses, child education, and other expenses. However, life insurance is a complex product with many features and options. Here are 7 key features of life insurance that you need to know to make informed decisions.

1. Death Benefit

The death benefit is the core feature of life insurance. It is the amount paid to your beneficiaries upon your death. You can choose the amount of death benefit based on your financial needs and budget. It can be a fixed amount or a percentage of the policy value. You can also choose to have the death benefit paid in a lump sum or as a monthly income to your beneficiaries.

2. Premium

The premium is the amount you pay for your life insurance policy. It can be paid monthly, quarterly, semi-annually, or annually. The premium amount depends on your age, health, lifestyle, and the coverage amount. You can choose to have a level premium, where the premium remains the same throughout the policy term, or a renewable premium, where the premium increases as you age.

3. Policy Term

The policy term is the duration for which your life insurance policy is valid. It can range from 1 year to 30 years or more. You can choose the policy term based on your financial goals and the age of your dependents. A longer policy term provides more financial security, but it also increases the premium amount.

4. Riders

Riders are additional benefits that you can add to your life insurance policy. They provide extra coverage for specific events or situations. Some common riders include accidental death benefit, critical illness benefit, disability benefit, and waiver of premium. Riders increase the premium amount, but they can provide valuable protection when you need it.

5. Cash Value

Cash value is a feature of some life insurance policies, such as whole life and universal life. It is a savings component that accumulates over time. The cash value grows tax-deferred and can be used to pay premiums, take out a loan, or surrender the policy for its cash value. However, cash value policies have higher premiums than term life policies.

6. Underwriting

Underwriting is the process of evaluating your risk and determining your premium. It involves a medical exam, blood test, and review of your health history, lifestyle, and occupation. The underwriter assesses your risk of dying prematurely and sets your premium accordingly. If you have a high-risk occupation or medical condition, you may have to pay a higher premium.

7. Convertibility

Convertibility is a feature of some term life policies that allows you to convert the policy to a permanent life insurance policy without undergoing underwriting. It is a valuable option if you need long-term coverage but cannot afford the high premiums of permanent life insurance. However, the conversion may have restrictions and higher premiums than buying a permanent policy from the outset.

Conclusion

In conclusion, life insurance is a complex product with many features and options. Understanding the key features can help you choose the right policy for your financial goals and budget. The death benefit, premium, policy term, riders, cash value, underwriting, and convertibility are the most important features to consider. Consult a licensed insurance agent or financial advisor to help you navigate the life insurance market and make informed decisions. Contact Matador Capital Partners as we have the knowledge, skills, and abilities, along with certified agents to assist you with your needs.

Copyright © 2020 The Matador Capital Partners
6100 Greenland Rd., Ste 403, Jacksonville FL 32258
NPN: 17138551 • FL: L100922 • GA: 209965 • LA: 970747
MD: 3002372994 • NC: 17138551 • PA: 1094103