Life Insurance in its most basic form offers financial protection for your loved ones to settle any monetary obligations in the event of your death. Chances are that life insurance is vital for you, once you have loved ones depending on your income. To confirm that you need life insurance, think through worst-case scenario, i.e you’re the only breadwinner, and you die how will your loved ones cope financially? Would they have the necessary financial resources to not only pay for your final expenses like funeral costs and medical bills, but also be able to meet ongoing living expenses like housing, food, clothing, medical, transportation, education, etc?
Losing someone is large emotional upheaval for the near and dear ones. This does not need to be compounded by financial difficulties. Therefore sufficient life insurance protection is necessary.
In it's basic form, life insurance provides instant cash to your family after death. This is designed to be used to replace your insured’s income and can help your family meet many of its future financial needs. Regardless of your marital or employment status - life insurance makes sure that people you care about are financially stable and can meet their daily expenses even if you're not there to take care of them.
When you take out life insurance, a beneficiary has to be named. A beneficiary is the person or financial institution who will receive your life insurance proceeds in event of your death. You should always name a second dependent beneficiary, in the event that you outlive the first beneficiary. Pay attention to the specific wording of your beneficiary designations. This will ensure that the right person receives the proceeds of your life insurance policy. Naming one and keeping that individual or institution current are critical elements that have to be taken into account while purchasing life insurance.
Life insurance is easily one of the most important purchases you will ever make in your life. In the face of uncertainties, the proceeds from this investment tool can help your family in a variety of ways including pay bills, continue a family business, finance future needs such as children's education and protect your spouse's retirement plans. Other than being a cash payment to your family in the time of the death, life insurance has other important benefits.
While settling on how much life insurance to buy, you need to establish your goals in purchasing life insurance coverage. First item is evaluating your family's needs. Gather all of your personal information and estimate what each of your family member would need to meet current and future financial obligations. Add up all of the resources that your surviving family members could draw upon to support themselves. These can include Social Security payments, as well as employer life insurance plans. The gap between their needs and the resources to meet those needs establishes your life insurance need. Since most people rely on their income completely, it is advisable to buy protection that equal to of anywhere between 5 and 20 times your annual income.
Choosing life insurance product for most people may seem like guesswork, but in fact it is quite a complex process that depends on a number of different factors. The two most common types of coverage are Term Life Insurance and Whole Life Insurance.
Term Life Insurance - It is designed to meet temporary needs and offer protection for a specific period of time and pays a benefit if you die only during the term. If you outlive the term, the policy becomes null and void. Term life insurance is ideal when you need protection for income that will disappear at a specific point in time. The number one advantage of term life insurance is the high life coverage at fairly low premiums.
Whole Life Insurance -Whole life insurance provides protection until death. As long as you pay the premiums the coverage amount will be paid up on the death of the person whose life is assured. Whole life insurance accumulates cash value, but how much that lump sum cash value will be depends on the type of the policy.
The most important difference between the two is that term insurance provides protection against death during a specified period and whole of life insurance provides protection against death at any time.
It's surprising how much rates vary by company for the exact type of coverage. Rates and coverage will vary from state to state. You will need shop around on your own or we recommend talking to an independent life insurance agent to obtain a life insurance plan that is best for you and your family.
