Life Insurance Spartanburg SC provides financial protection for your loved ones during your death. Bankrate can help you find a policy that fits your needs and budget.

The owner is responsible for paying a policy, and the insured is covered by the policy. The insured can change beneficiaries, but the owner cannot.

Life insurance is a contract between the policyholder and an insurer or assurer, where the latter promises to pay a designated beneficiary a sum of money upon the insured person’s death (also known as the policyholder). It is typically paid out in exchange for regular premium payments, or one lump-sum payment. It covers both natural and accidental deaths, and some policies also cover terminal illness and critical illnesses. Life insurance is available individually or through group schemes such as workplaces, associations, unions, pension and superannuation funds. In the case of group life insurance, individual proof of insurability is not normally required, and underwriting is carried out on a statistical basis rather than on an individual basis.

Policyholders can also choose to use the death benefit to cover their funeral costs. The term of the contract is called the Policy Term, and it can be for a specific period of time, or it can be a permanent policy. It is common to have a permanent policy and also a temporary one, with the duration of the temporary policy tied to the length of a loan or other debt secured against the policy.

Beneficiaries can be either primary or contingent. If you have a life insurance policy with multiple beneficiaries, the proceeds will be divided by percentage among the people or entities you named. Generally, the beneficiaries will be your loved ones but they can be other individuals or companies as well.

The life insurance contract is a legal contract that must be governed by state law. Because of this, only certain companies can sell and issue life insurance, and they must be regulated by the state’s insurance department. It is important to consult a life insurance professional before purchasing a policy.

Types

The type of life insurance you buy is crucial to ensure your family’s financial needs are covered in the event of your death. To determine your policy’s best type, consider your family’s financial goals, your budget, and the types of coverage available to you. A financial professional can help you compare your options.

There are several different types of life insurance policies:

Permanent life insurance provides protection for your entire lifetime as long as you pay your premiums. These policies typically have higher premiums than term life insurance. However, they also include a component that builds up over time, called cash value, which you can borrow or withdraw against.

A whole life policy, the most traditional form of permanent life insurance, offers a guaranteed minimum increase in your cash value each year. These policies can be underwritten quickly and are often the cheapest option, though they may require a medical exam.

An indexed universal life (IUL) policy allows you to invest in an underlying index, like the S&P 500 or NASDAQ. The returns on these investments are linked to an interest rate that is credited to the cash value of your policy, so you can earn additional interest in addition to the death benefit payout.

A variable universal life (VUL) policy is more flexible than IUL, allowing you to funnel some of your cash value into investment subaccounts that are designed to grow at a higher rate than the cash value in your basic plan. This can provide you with a greater opportunity for increased returns but can also come with more risk. Also known as a split-dollar policy, a split-premium life insurance allows you to split your premium payments between a cash value component and a level death benefit.

Benefits

There are a number of benefits that life insurance policies can provide. The most obvious is that they can give beneficiaries a lump sum of money upon the policyholder’s death. This money can help beneficiaries pay off a mortgage, cover funeral costs, or even fund retirement. In addition, if a beneficiary is diagnosed with terminal illness or critical illness, some life insurance policies offer the option to receive an accelerated death benefit, which can help offset medical expenses in these circumstances.

The death benefit from life insurance is generally tax-free for beneficiaries, meaning that it can provide a safety net that helps families get by after a loved one dies. This can be especially important for those with families that rely on one income, such as stay-at-home parents or those with children still at home.

Many life insurance policies also include a cash value component that grows over time and earns interest. This money is often made available to the owner of the policy through procedures similar to taking a loan or withdrawal. In addition, it is usually possible to change the beneficiary of a life insurance policy at any time without incurring any fees or losing coverage.

Lastly, some life insurance policies can be used to provide burial coverage for an individual who has died. These policies are often referred to as final expense insurance or burial policies, and they typically offer low death benefit amounts with simple underwriting, which means that applicants do not have to undergo a medical exam in order to be approved for coverage.

Regardless of your reason for purchasing life insurance, it is always wise to reevaluate your needs on an annual basis or after significant life events, such as marriage, divorce, or the birth or adoption of a child. Depending on your goals, you may want to increase your death benefit, add or remove beneficiaries, or change the amount of premium payments.

Premiums

Premiums are the amount of money the policyholder pays to keep life insurance coverage in force. A portion of the premium goes toward the cost of the death benefit, while the rest helps pay the insurer’s operating expenses and investments. In some cases, premiums are based on the actuarial prediction of the insured’s life expectancy, which takes into account risk factors such as age, gender, medical history, occupation, and lifestyle choices (e.g., smoking, high-risk hobbies).

Generally, the larger the death benefit and the higher the coverage amount, the higher the premium. In addition, the type of policy you select plays a role in determining your premium. For example, term policies tend to have lower premiums than permanent policies because the underlying assumption is that you’ll outlive the term period and not need a payout.

As you shop for a life insurance policy, consider your personal and professional circumstances, as well as how you want to use the policy’s proceeds. For instance, if you have children who will need financial support after your passing, you may wish to secure a larger death benefit and correspondingly higher premium.

Also consider your health, which will impact the likelihood of you living longer and thus increase your rates, as well as your lifestyle, as a dangerous job or extreme hobbies will likely inflate your rates in the eyes of insurance companies. Finally, opting for annual payments can often save on processing fees and may help reduce your premium costs. With some policies, you can even use accumulated cash value to cover your premium, avoiding out-of-pocket payments. If you do this, however, it’s important to know that any outstanding loan balance will be taxable.

Riders

A life insurance rider (also called an endorsement) allows you to customize your life insurance policy and add coverage that isn’t available with the base policy. While some riders are available at no cost, others can be quite expensive. In addition, it’s important to understand that adding a rider usually means going through the life insurance underwriting process again, and that could mean another medical exam.

Some riders are specific to particular circumstances, such as an accidental death or waiver of premium rider. In addition, there are long-term care riders that provide a source of funds to help pay for home health aides or nursing home expenses. There are also riders that cover children and provide a cash benefit to the family in the event of a child’s death.

One of the most common and valuable riders is a return-of-premium rider. This option allows you to recoup the extra premiums you paid for a temporary period, such as when you converted from term to permanent life insurance at the end of your level term period. However, this rider typically comes at a substantial price, often more than tripling your original premium.

It’s important to talk with a financial professional who can walk you through the various riders and advise whether they make sense for your unique lifestyle and goals. It’s also important to remember that the best time to purchase a life insurance rider is when you initially buy your life insurance policy. Adding a rider later may require new underwriting and a medical exam, which can be costly. It’s also worth noting that some riders, such as an accelerated death benefit, are only available if the person is diagnosed with a terminal illness and can’t expect to live much longer.