5 Things to Know About Life Insurance

Life insurance: simple in theory, complicated in practice. Navigating the world of life insurance can be tricky, but it’s a fundamental component of your personal finances. Here are five things you need to know about life insurance, courtesy of the professionals at American Investment Planners, LLC.

1. If anyone relies on you financially, you need life insurance. Whether it’s a dependent spouse, children, parents, or someone else, if someone relies on you financially, you should have a life insurance policy so they are protected in the event of your untimely death.

2. There are four primary players in every life insurance policy. They are the insurer, the owner, the insured, and the beneficiary. The insurer is the insurance company. The owner is responsible for paying the monthly premium. The insured is the person whose life is being covered by the plan. The beneficiary is the recipient of the payout if the insured passes away.

3. There are two types of life insurance. They are term life insurance and permanent life insurance. Term life insurance covers you for a set length of time, such as 5, 10, or 20 years. Permanent life insurance is broken down into three subcategories: whole life, variable life, and universal life. You can learn more about those here.

4. Life insurance should not be treated as an investment. It is a risk management tool. Some life insurance policies do offer an investment component, but you are better off putting your money into an emergency fund, Roth IRA, 401(k), or paying off your non-mortgage debt.

5. Life insurance plans can be extremely expensive, or relatively cheap. Premiums can vary drastically depending on your policy type, age, health, and other factors. You should discuss your options with a financial advisor at American Investment Planners, LLC to pick the plan that best meets your needs and budget.

Want to learn more about life insurance? The financial professionals at American Investment Planners, LLC are available for consultation. To schedule an appointment with one of our advisors, please please call (516) 932-5130 or email info@americaninvestmentplanners.com.