Term life insurance can offer an extreme amount of protection for you and your family, but so can a will. Although a life insurance policy will give a payout to your beneficiaries when you pass away, you should ensure that all of your finances are taken care of if you die. It’s vital to understand who would be a valuable beneficiary of your loved ones, what should be included in your will, and more. We will dive into the basics of life insurance, you can even get life insurance with no medical exam. Also, learn about writing a will and what next steps you should be taking.
Understanding the Difference Between Term Life Insurance and a Will
What is Term Life Insurance?
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Term life insurance is the most basic type of life insurance policy that provides coverage for a set period, usually ranging from 5-30 years. If the policyholder dies, their beneficiaries receive the payout. Term life insurance is usually much more affordable than permanent life insurance because there is no cash value to the term policy. If you are still alive when your term policy expires, you do not get any of the money you paid for the premium. You can purchase a new term life insurance policy, switch to a permanent life insurance policy, or decide not to buy any insurance. Affordable Life USA offers affordable life insurance plans.
The insurance company must calculate your premium, which is the amount of money you’ll pay monthly, quarterly, or yearly. The company will consider your age, gender, career, smoking habits, and more to determine your premium. In addition, there is usually a medical exam required to find out your weight, blood pressure, and more. Those who are deemed unhealthy will be paying a higher premium than those who are considered healthy.
What is a Will?
A will is a legal document that determines your wishes for when you pass away. The will includes any assets, property, money, valuables, and anything else you wish to give to your loved ones. A will can also include how you would like to handle the care of any minor children you were taking care of before you died. If you die without a will, your heirs will be spending extra time and energy trying to sort out your affairs for themselves.
Some people believe that a will is only for the rich, but that’s not entirely true. A will is valuable to make sure your assets are given to who you want, you can identify who you would like to take care of children or pets, and your heirs will have a quicker time accessing your assets. Therefore, it’s important to take every step possible to ensure that your wishes are carried out correctly.
Do I Need Life Insurance and a Will?
If you already have a will written out and know who will receive your assets, purchasing life insurance is still essential. The life insurance payout will supplement the income your family lost after you pass, and it can create a comfortable safety net for your loved one’s savings. Life insurance is technically considered an income replacement, but a will is only regarding your own assets. Although having one of the two is better than nothing, having both life insurance and a will can set your family up not to worry about their financial needs in the future.
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Should I Put My Life Insurance Payout in My Will?
A life insurance policy and a will are two completely separate legal documents. This means that they cannot be combined or used interchangeably. So ultimately, no, you should not put your life insurance payout on your will. Your will can’t specify who will receive your life insurance payout since they are two different documents. When you purchase your life insurance policy, you will determine who your beneficiaries are, and if you ever want to change them, you would have to do so through the insurance company.
Although there are pros and cons to both term life insurance and wills, it’s highly beneficial to have both. Having both documents will allow you to set up your family’s future and give you peace of mind. With Fabric, you can quote and compare life insurance policies and even write your will. In addition, their website and mobile app make it easy to make sure you are taking care of your children’s needs and organizing your family’s finances. Learn more and download the app today to start planning like a parent.
