It’s never a question of do you need life insurance. The question should be why you need life insurance. Simply put, life insurance is a contract between the insurer and the policy owner whereby a benefit is paid to the designated beneficiaries if an insured event occurs which is covered by the policy. None of us want our families to be unprepared for the future. By planning today, we can protect our family’s tomorrow.
There are many benefits of life insurance.
- Replace Lost Income: If something happens to the insured, life insurance is a means to replace lost income.
- Pay off debts: Debt can be a big burden on any family including yours. This becomes acute in the absence of your income. Life insurance acts as financial security for your family and can help repay the debt.
- Pay Final Expenses: You may have large medical bills and legal expenses. Along with your funeral expenses, it can add up to very high final expenses. Life insurance can take care of the final expenses.
- Children’s education: Children’s education can be costly. Life insurance can help you by creating a lump-sum of cash that you can use to help pay part of your children’s education costs.
- Taxes: Life insurance can also used to pay potential federal estate taxes.
When buying life insurance, there are a few things you need to consider. There are two basic types of life insurance: term life insurance and whole life insurance. Term life insurance provides coverage for a specific period or term. If you opt for term life insurance, you will have to determine the term of the policy which generally ranges from 1 to 30 years. The premium will depend on the term. Whole life insurance provides death benefit with a cash value component. A whole life insurance policy is one can keep for as long as you live and that will pay the face amount to your beneficiaries. You will have to decide on a coverage amount. This will depends on many factors including how much income your survivors will need, how much you own and owe, and the amount of other life insurance available to you. The premium you will be paying for life insurance is an important factor you need to consider when buying life insurance. Your premium will depend on your age, your health, the type and amount of life insurance you’re buying and certain other factors like your occupation, smoking habits, etc. Shop around for policies. Don’t just buy the first policy you are offered. Ask for quotes from different companies.
