Most people have some form of life insurance. If you are considering creating or updating your estate plan, you should also consider purchasing or perhaps changing your life insurance policy as well, especially if your financial situation has changed in recent months or years. Please continue reading and reach out to our experienced Pennsylvania estate planning attorneys to learn more about life insurance and how it can be utilized as an integral part of your comprehensive estate plan. Here are some of the questions you may have:
What is the purpose of life insurance?
When you purchase a life insurance policy, you are essentially establishing a contract between you and the insurance company. When you do, the insurance company will provide your beneficiaries with one lump-sum payment upon your passing in exchange for premium payments that you made during your lifetime. This payment is known as a “death benefit.”
Are there different types of life insurance?
There are various types of life insurance, all of which function differently, which is why it is best you select the policy that works best for your particular situation. The most common types of life insurance are as follows:
- Universal life insurance: Universal life insurance will provide you with lifetime insurance, and they are often considered flexible policies, meaning in many cases, you can actually lower or raise your premium payment or coverage amounts at various points throughout your life. You should also note, however, that these policies generally come with higher premium payments than others.
- Term life insurance: Term life insurance is primarily for those who lost potential income during working years. When you purchase term life insurance, your beneficiaries may receive financial relief from you being unable to work. This relief comes in the form of a lump-sum payment.
- Whole life insurance: Whole life insurance provides lifetime coverage, though the premiums are generally higher than term life insurance premiums. Furthermore, they are generally fixed payments with a cash value, thus functioning as a safety component which may accumulate, tax-deferred, over time. For this very reason, whole life insurance may be an integral part of your estate plan, as it can help preserve the wealth and monetary assets you are looking to transfer to your beneficiaries upon your passing.
When will my life insurance be distributed to my beneficiaries?
Generally, life insurance claims are processed within 60 days, however, as long as you ensure all the necessary documentation is in order, your claim should be processed within 14 days. Our Montgomery County estate planning attorneys can help ensure the process goes as smoothly as possible–all you have to do is ask.
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