Life Insurance 101, Just the Basic Facts
No one wants to think about the fact that they are going to die, but the simple fact is that no matter how well prepared you are or not, we are only here for a brief span of years. While you do the best you can to take care of your loved ones while you are alive, you should also be planning to take care of them after you have passed on with the appropriate level of life insurance.
While you are alive and remain healthy, you have a job and use the income to support your family. For most of us this means having enough money to pay the mortgage, put food on the table and take care of the rest of the monthly bills that keep our families happy, healthy and safe. This will continue to work well until the day you die, at which point the income you have been bringing in dies along with you. This is where the right life insurance policy is designed to step in.
If you talk to a professional insurance agent and ask him what type of insurance he would recommend, he is going to tell you that there is a variety of things that you will need to think about when buying insurance. Each of these things must be carefully considered before you purchase any type of insurance policy to ensure that your family is going to be properly taken care of in the event of your death.
To start with you need to take a very close look at all of your debts. This list must include the mortgage on your home, any credit cards or other loans you may have and your car loan. Remember, when you die, your family is still going to be responsible for making sure that these debts are paid off. It is extremely important that your life insurance policy be enough to pay off all of these debts or you may leave your family in dire straits.
Following this you should take a close look at the amount of money it costs per month to take care of your family and ensure that they can continue to enjoy the same lifestyle that they are accustomed to. If you are the sole provider for your family, you do not want to leave them destitute or suddenly having to sell everything they own to put food on the table. This should not only include what you are earning today, but should take into account your future earnings including increases of about 5% per anum for a period of at least ten years.
Your life insurance policy should also include enough to cover end of life expenses such as your funeral. While no one wants to think about this, you certainly do not want to leave your surviving family to have to pay these costs as they can run into thousands of dollars. This is something that you need to make sure is more than adequately covered as these cost continue to rise at an accelerating rate.
What type of life insurance should you buy? There are several factors that must be taken into consideration. They younger you are when you buy life insurance, the more options you are going to have open to you. The most common and affordable is term life insurance, in which you agree to pay a set premium for a predetermined number of years. If you should die unexpectedly during this period, your survivors will be paid the benefits.
There is whole life that you will pay a monthly or annual premium on that will never go up and can never be cancelled. This type of insurance will never expire and depending on the policy you have may even pay out before you die. If you prefer to be more involved in how your life insurance is managed, you can take out a variable life insurance policy that actually allows you a certain amount of leeway in how your money is invested to maximize your policy’s value. Universal life not only has a death benefit, but builds up a cash value over time that you can use at a later date.
The one thing to remember is that they younger you are when you purchase your life insurance policy, the more affordable it is likely to be. If you would like to learn more about the different types of life insurance and get rate quotes that can make it more affordable, visit the Life Insurance Agency where you will find answers to all of your questions.
Contact: Life Insurance Agency