Buying life insurance is one of the most important financial decisions you’ll ever make.
And like any investment, you want to get the most out of it.
“It’s important to take the time to learn as much as you can about types of life insurance and features of the policies,” said Annise Henson, life insurance product manager for Unum. “Different features can help you and your family now, or be useful in the future.”
Here are some things to watch for:
- Cash withdrawals and loans. Many universal and whole life policies allow you to withdraw or borrow money, and interest rates tend to be relatively low. (You will have to pay back the loan, if you want your beneficiaries to get the full death benefit.)
- Spouse or child term riders. These help you buy term life insurance for your spouse or dependent child. It can be a more affordable way to get coverage if you can’t afford separate policies for family members.
- Long-term care riders. With this option, you can use the benefits of your policy to pay for long-term care services in exchange for a reduced life benefit.
- Accelerated death benefit. If you’re diagnosed with a terminal illness, you can get cash advances against the death benefit of your policy. Many people with this benefit use the money to help pay for treatment and other expenses when they have only a short time to live.
- Waiver of premium. If you become seriously ill or disabled, this feature pays your premium for you.
- Survivor support services. These services provide objective financial and legal assistance to beneficiaries — valuable during an emotional and stressful time.
- Employee assistance programs. EAPs offer resources for problems that can affect your personal and professional life. Resources are usually free and help address issues such as substance abuse, stress, marital problems, legal concerns and major life events.
- Guaranteed purchase option. This helps you buy additional coverage — without proving you’re in good health – at set dates in the future or when certain life events occur, like marriage or the birth of a child.
It’s rare that a life insurance policy would include all these options at once, Henson adds: “Get familiar with what your policy includes and take advantage of the coverage you’re paying for.”
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