Let’s keep it real–most people don’t get excited about the idea of buying life insurance. But for many, our recent pandemic may have given you a reason to pause on that thought. People are more likely to buy life insurance today than ever before.
If you’re finding yourself in the “more likely” column these days, knowing what to expect can make it easier to get started. To help us with that, we’re excited to have our friend Allison Couch from Modern Woodmen to give us a quick course in “Life Insurance 101”. Below you’ll find some answers to some of the most commonly asked questions, common terms explained, and even a couple myths to bust!
What does life insurance do?
One thing that life insurance does is to help with immediate expenses, such as burials, uncovered medical expenses, mortgage or rent payments, debt, taxes, and state settlement costs.
In addition to the immediate expenses, it also helps with ongoing and future expenses. Loved ones left behind still need food, utilities, transportation, health and insurance, education, or retirement.
What are some common terms to be aware of when buying a policy?
Insurability — this is your ability to obtain life insurance. *Not everyone is able to get life insurance, so it’s important to get it when you’re young and healthy.
Beneficiary — this is the person(s) to whom the life insurance policy will be paid to, upon the insured person’s death.
Face amount — this is the dollar amount or death benefit of the policy.
What are the different types of policies?
The first type of life insurance policy is referred to as a “term” policy. This is a temporary coverage, and is similar to renting a home–you have the policy until your “term” (or “lease”) is up.
The second type is a permanent policy. This coverage is for your whole life, similar to owning a home. You own it after it’s paid off, just like you own your home after the mortgage is paid.
Why should new parents consider purchasing a life insurance policy?
By purchasing life insurance for your children when they’re young, you will protect your children’s future insurability.
Buying a life insurance policy and discussing those details in front of (or with) your children, depending on their age, is a great way to instill financial literacy and good financial habits in your household.
What are some common myths or misconceptions about life insurance?
“I have life insurance through work and that’s enough.” Not always true. And even if you have it, often times it’s not enough. It is a benefit, not a guarantee, and it does not protect your future insurability.
“I only need life insurance if I’m the primary breadwinner in my family.” No. Stay-at-home parents perform valuable services such as childcare, cooking, housecleaning, and household management–these services can be very costly to replace for a surviving spouse or partner.
What are the first steps in the process of purchasing a policy, and what should I have prepared beforehand?
- Find a licensed agent. It is our job to get to know you and to be able to look around the corner for you.
- Cast aside preconceptions. For many people, the biggest eye-opener is cost.
- Know the key questions. Ask yourself, “if something were to happen to you tomorrow, what would be the financial impact on those you care for?”
In the end, there are NO bad questions when it comes to something so important and impactful in your family’s future. If you are looking for someone to talk to, we highly recommend reaching out to Allison Couch–not only is she a licensed agent with Modern Woodmen, but she is also a mom of two small children. She understands where we are coming from, and she is a great resource for moms and families in our community who are looking to plan better for their family’s future. To ask questions and/or to get this process started, reach out to Allison here.
MOM BONUS: If you decide to go with Modern Woodmen for your life insurance policy, your family will enjoy a membership to the Birthday Book Club! Modern Woodmen kids ages 1 to 16 can receive an age appropriate book — from classic tales to contemporary fiction and educational resources — each year during their birthday month. The books help kids develop a love of reading while giving them fond memories of the “birthday books” they received throughout childhood. Learn more here.
Special thanks to our friend Allison at Modern Woodmen of America for helping to compile this resource. Allison is an Iowa mom of two little boys who would love to help YOU plan for life. If you’re losing sleep at night (who isn’t, right?) over your finances and/or your long term goals and plans, please consider reaching out to Allison. In her own words, “The best part of my career is the fulfillment and joy I feel from meeting and helping people with such important, life-changing decisions. This career also allows me the flexibility to not only serve my community, but to be there for my family.”