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What Is Life Insurance?

One of the few sure things in life is that it’ll eventually end and this is something everyone should prepare for. Even if the topic is uncomfortable, it’s important to consider what would happen to others if you were no longer around. For many Maine residents, carrying life insurance is an important component of being prepared for the ultimate end.

Life insurance, at its most basic level, is a form of protection against the effects that a policyholder’s death could have on others. Should a policyholder pass away, their policy will normally make death benefits payments to named beneficiaries. Some policies may offer only these benefits, while other policies may combine these benefits with investment opportunities.

Who in Maine Should Have a Life Policy?

Broadly speaking, Maine residents probably should have a life policy if their passing away would cause a financial strain on others. Some examples where a life policy may be appropriate include:

  • Parents who financially provide for their children
  • Spouses who financially provide for their spouse
  • Caregivers who provide essential services to a disabled person
  • Caregivers who provide free childcare for their children or grandchildren
  • Business partners who are essential to the operations of their business

With regard to businesses, a life policy might make sense if a partner’s death would cause the business to fold and other partners to lose their insurance. In this situation, a policy that names the business or business partners can help. Key man insurance might be appropriate too.

Additionally, some people elect to direct their life policy’s death benefits not necessarily to meet an acute need but rather to leave a legacy. For instance, grandparents might leave benefits to their grandchildren so that their grandchildren can afford college tuition. Similarly, anyone might choose to give some or all of their policy’s benefits to a charity of their choice.

What Is the Difference Between a Whole Life Policy and a Term Life Policy?

There are a few different types of life policies and two of the main types are whole life policies and term life policies. Their distinctive features make each useful in certain situations.

Whole life policies combine death benefits with investment options and they’re designed to last the policyholder’s entire life (hence the name). These policies often have escalating premiums that become larger as time passes, but the investment component of them also often becomes larger. By the time a policy’s premium actually becomes expensive, which takes quite a bit of time, the investments hopefully cover that premium. The investment component included in whole life policies can make these an attractive option for anyone who needs life coverage and also wants to save for their senior years. Since these policies are designed to last until the policyholder passes away, they also can be a good option if the policyholder needs to care for someone who’ll be disabled all of their life. The benefits from a policy can be used to pay for the disabled person’s care once the policyholder is no longer around to provide care.

Term life policies usually offer only death benefits and they normally provide coverage for a set amount of time (which is where their name comes from). Most term policies have lower premiums that don’t change over the course of the policy. The low premiums of term life policies make them an attractive option if coverage is only needed for a set amount of time. Parents might get these policies if they only need coverage until their children grow up, for instance.

While these general principals can be helpful when deciding between the two types of life policies, everyone should select a policy based on their unique situation. An insurance agent who specializes in life policies can help determine whether a whole or term life policy makes more sense given a particular set of circumstances.

How Can Maine Residents Get Life Insurance?

For help finding life insurance that’s tailored to your situation, contact the Trusted Choice agents at Rousseau Insurance. Our agents have assisted many Maine residents with their life insurance needs and we’re ready to help you.

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