Although life insurance isn’t legally required in North Carolina, it can be a valuable financial safety net for families and individuals across the state and beyond. Many North Carolinians choose life insurance to give them peace of mind, knowing their loved ones are financially protected in the event of an unexpected, unwanted change in fortunes. This article examines some of the options available and factors to consider before purchasing a policy.
Life Insurance: Key Considerations
- Financial dependents
If you have family members or loved ones who rely on your income, life insurance can help cover expenses such as mortgage payments, other debts, education fees, and daily living costs in the event of your passing.
- Final expenses
Life insurance can cover funeral and burial costs, taking the financial stress off your bereaved loved ones in their darkest hour.
- State regulations
North Carolina has specific laws governing life insurance policies, including a 10-day ‘free look’ period and a 30-day grace period for missed payments.
Policy Options: Term vs Permanent Life Insurance
NC residents can choose between ‘term’ life insurance (temporary coverage) and ‘permanent’ life insurance (lifelong coverage with cash value benefits). The suitability of each option depends on the individual’s needs and financial goals. A concise breakdown of the differences is as follows:
Term Life Insurance
- Coverage is provided for a specific term only (10, 20, or 30 years, etc)
- Typically more affordable than permanent life insurance
- Does not accumulate cash value
- Flexibility to convert to permanent life insurance (not all policies)
Term life insurance policies are generally considered best for temporary financial protection. They are an excellent way to cover debts, such as mortgages, or provide financial assistance for dependents until they become independent.
Permanent Life Insurance
- Lifelong coverage as long as premiums continue to be paid
- Generally more expensive than term policies, due to the additional benefits
- Build cash value over time, which can be withdrawn or borrowed against
- Some policies include investment options
Permanent life insurance policies are considered the best for wealth accumulation and long-term financial and estate planning.
A Word on Employer-Sponsored Life Insurance
Many employers in North Carolina offer group life insurance as part of employee benefits packages. While this may seem generous and lead us to believe we can put the subject out of our minds, we need to delve a little deeper to be sure. Most employer-sponsored policies typically offer little more than the most basic coverage, with the option to purchase additional coverage as needed. Investigate your group life insurance policy today and compare it with a privately purchased policy. The differences may be startling.
Why North Carolinians Need Life Insurance: Final Thoughts
Although it’s not something any of us enjoys dwelling on, the bottom line is that acquiring life insurance is one of the most powerful ways North Carolinians can provide for their families and loved ones in the event of the worst happening. Financial worries are the number one cause of stress in the overwhelming majority of individuals. Sourcing, researching, and purchasing an appropriate insurance policy can lift a huge mental burden from our shoulders, knowing we have done our best to provide for our families and protect them when we’re no longer around to do so.