What is Life Insurance, and Where Can I Get One in Pennsylvania

Life insurance can be a mind-boggling subject that can overwhelm and confuse you.

It’s easy to become intimidated by the thickness of the booklets covering the various policies or feel confused by the terminology used.

Our aim is to simplify life insurance and let you realize options for shopping a policy in Pennsylvania. We understand that navigating the insurance space can be crippling, so we advise you to speak to a trusted advisor who will answer any further questions you may need.

But before we delve into the world of life insurance, we need to define some jargon that would help us understand what your advisor might talk about. This will help you understand the technical terms in contracts and paperwork.

• Policy: This is a legal agreement between you, the policyholder, and the insurer. It guarantees that the insurance company will pay an amount of money, called the death benefit, to one or more beneficiaries when the insured person dies.
• Premium: A premium is the money the policyholder pays the insurer in exchange for life insurance coverage. Premiums can be a single upfront payment or regular payments made over time. The premium depends on various factors, including the life insurance type, age, health rating, and length of coverage.
• Actuary: Someone who gathers and evaluates data for appraising insurance risks. An actuary analyzes and sets premiums.
• Annuity: A fixed amount of money paid to a person annually for the rest of their life. Certain plans offer annuities instead of a lump-sum payment.
• Beneficiary: The person who gets the money when the policy pays off.
• Cash value: Along with your death benefit, most policies allow you to accumulate a certain amount.

Life insurance is a contract that pays out a death benefit when the insured person passes away. Usually, the insured is the policyholder, too. Like other insurance policy types, it provides financial stability to your loved ones in case of the unfortunate event of your death.

The benefits and protection that life insurance offers make it popular among people who want to secure their future and family. Although not mandated by law, having life insurance adds another layer of protection to those who take advantage of this insurance program.

There are two types of life insurance: term and permanent, and within permanent life insurance, there are two more: whole and universal. The significant difference between term and permanent is that the cost of term insurance is lower compared to permanent but with fewer benefits. The premium cost of permanent life insurance is higher, but the benefits and payout terms are more flexible than the term.

Here is more information for each type:

This type of insurance is the cheapest kind while you are young. It covers a specific term, typically 10-30 years. In the event of your death during the term, the insurance company will pay your beneficiaries. After the term has ended, the benefits will no longer be available unless the policy is renewable or convertible, which many insurance companies offer this option. It’s important to remember that the premium will most likely increase on renewal.

With whole life, you can enjoy lifetime coverage as long as you keep paying the premium, and this type of policy also has a cash value and fixed premiums. Policyholders of this type of insurance may have to pay their premiums until they pass away, depending on the policy type. While other policies only necessitate premiums for a defined period.

Another type of permanent life insurance is universal life insurance. The policy lets you adjust your death benefit and premium to suit your changing needs while accruing cash value. Universal Life can be divided into variable universal life insurance and indexed universal life insurance.

There are basic questions you need to answer to gain clarity on which insurance you want to avail. While knowing what’s the purpose of life insurance, going to its excessive details can be overwhelming. To help you out, these are some simple questions that you need to ask:

• How much available budget have you set aside for your life insurance?
• How many years do you want to be insured?
• Who will benefit from this life insurance at the time of your death?
• And how much money are they going to get from your life insurance?

Once you have answered these questions, share these answers with your financial advisor and determine the best policy that suits your needs. Although this activity appears simple, pay attention to the nitty-gritty details when reviewing your policy. But the basic questions above should remain the same and visible.

Let’s break down the basic considerations when buying life insurance:

Determine which types of insurance you want to have. If you want to cover yourself for a certain period, say, on your working years, look at term life insurance. Term Life is a good option if you want your mortgage paid off and your family financially secure after your unexpected death.

On the other hand, if you want to cover your life as long as you live, choose permanent life insurance. Usually, this insurance covers your burial expenses and, sometimes, income replacement for your beneficiary. Self-employed individuals without severance or retirement pay should consider permanent life insurance. You have flexibility with permanent type and can invest while paying your premium.

You must know how much you will spend on your premium to sustain your policy. When talking to your financial advisor, they usually start by asking how much you make and save. That’s why you have to be comfortable talking about these kinds of confidential information to other people.

The basic formula is to know how much your income is and what your expenses are. The difference between that is the money that you can spare for other things, like an insurance policy.

It’s also worth noting that pre-existing medical conditions would affect your life insurance cost. You need to pay a higher premium to maintain the policy that should have been cost lower if not with your medical condition. Best to talk with your financial advisor about this, and that pre-existing medical conditions should be declared beforehand.

Now, ensure that your life insurance pays for your expenses after your unexpected passing. By expenses, we mean that it needs to pay for things such as remaining mortgages, income replacement, burial costs, and last wishes and education if you have any children left behind.

In simpler terms, the beneficiary of your policy receives the death benefits. Beneficiaries can be a person or an entity.

And by entity, it can be your estate or your business. For the person, the usual pick for a beneficiary could be your spouse or your parents (although this is not the case all the time).

Beneficiaries may face different challenges before getting the proceeds. For example, there are tax implications when you choose that the proceeds of your policy go to your estate. Or, if you happen to name a minor, he/she might not be able to get the funds.

Although we made it simple for you, there are complexities within the beneficiary options. Consider state laws, your last will, disqualifying beneficiaries, and specific details. Your financial advisor could help you with this.

The most important thing is to remember why you get life insurance.

Being informed about your rights and the ropes of life insurance would help you choose the best policy for you. Even doing your research, talking to an insurance advisor is crucial for shopping for the right policy. After all, when you’re ready to grab life insurance, they are the ones who can make it happen.

Knowing what you want to get out of your policy is critical. The key to having the best life insurance that fits your needs is to research and ensure that your financial advisor is attuned to what you want in your policy.

It’s of the essence that your financial advisor has your best interest in mind.

There are many life insurance companies in the State of Pennsylvania. One is Simpson Benefits.

One of the benefits of life insurance is that it gives you peace of mind that when your untimely death happens, your policy will help your family stay away from financial burdens. Note that there are no agencies that would offer the same policies to their clients.

At Simpson Benefits, we simplify insurance for the people of Pennsylvania. We specifically tailor our affordable life insurance to your needs. We look at our clients like family and advocate for their best interests. Simpson Benefits would love to review your needs and budget at no cost or obligation.

Simpson Benefits will help you create the best policy for you and offer Pennsylvania’s lowest life insurance premiums.

Talk to our financial advisors today.