Despite the vital importance of life insurance there are still a couple of common misconceptions about this contract. Simply put, life insurance is a way to guarantee that those who depend on your income are not plunged into a financial crisis after your passing.
Of course, your family circumstances will often dictate whether you actually need life insurance. Someone who is the primary provider for a spouse and children will definitely need life insurance. The money will not only help pay off the mortgage, but also ensure that dependents are provided for. However, according to Fox Business , even empty nesters and singles without children can benefit from life insurance, so don’t be too quick to dismiss it.
The Options Available To You
The first step when it comes to life insurance is actually discussing the topic, as most people prefer to not think about unpleasant things such as their own mortality. Next up is figuring out which life insurance would best suit your needs, as there are a couple of options available. In essence life insurance is divided into two main categories: term insurance as well as permanent insurance.
Term Life Insurance is usually more affordable, but unfortunately does not build up any cash value. Instead it is designed to offer financial protection only for a specific time period. The period can be anything from ten to thirty years but stops if the premiums are not paid. The benefit of this policy is paid out in the event of your death within the period that is covered by the policy. It is a useful way to cover your family in an affordable manner while working towards something more permanent. In contrast, Whole Life Insurance is generally more expensive, but there is no fear of “outliving” the policy as in the case of term insurance. Instead, your dependents are guaranteed a lump sum payout when you die, provided your payments were up to date. According to Forbes, there are also other benefits to permanent life insurance.
The Cost
It doesn’t matter what type of life insurance you use; you can expect higher premiums if you fall into certain risk categories. Whether it is a risky job, dangerous hobbies or even smoking, expect these to play a role in how much you pay. This is why it is especially important to know exactly what you are signing up for in order to avoid any nasty surprises. Working out what the death benefit of your policy would be in order to adequately provide for your family can also be tricky. By making use of online resources such as Life Insurance and talking to reputable agents, you can determine exactly how much is needed to give you the peace of mind that your family will be able to cope after you are gone.
Although thinking about life insurance is not pleasant, it is absolutely vital if you want your family to remember you with fondness instead of saddling them with a financial burden after your death. Just be sure to always read the fine print before signing up for any coverage to ensure that you know exactly what you are letting yourself in for.