Today I am going to talk a little about life insurance. Not the most exciting topic, but one that is very important. Life insurance is an important financial tool that benefits those you leave behind when you die.
Reasons to Buy Life Insurance
To Provide an Income For Your Dependents
This is probably the most common reason for buying life insurance, to take care of those who depend on you for their financial income. This could be your children, your spouse, or even your parents.
To Cover Final Expenses
Maybe you don’t have anyone depending on you financially, but funerals can be expensive, and you don’t want to create a financial burden for your loved ones.
To Pay Federal and State Death Taxes
It is a sad but true fact, Uncle Sam taxes you when you die. Buying life insurance can provide cash to pay estate taxes, so your heirs do not need to sell other assets (like the family home) to pay taxes.
Types of Life Insurance
There are two main types of life insurance, Whole Life and Term Life. The most common type of life insurance is level term insurance. With this type of insurance you pay a monthly or annual premium, and as long as you pay your premium you are covered for a set benefit amount. Quit paying your premium, and you are no longer insured.
Whole life insurance is usually more expensive, but has an investment feature built in. As you continue to pay your premiums, your policy begins to have a cash value, which you can borrow against if need be. Hold your policy long enough, and the earnings from the investment portion will begin to cover the premium amount.
Which Is Best?
Everyones needs are different, and you need to do some research to find the most cost-effective policy that best suits your needs. One way to Save Money on Insurance is to go through an online broker such as AdvantageTermLife.com. There you can get a quote on different types of life insurance and find a policy that meets your needs and your budget.
Remember, life insurance is a good way to protect your family financially when you can’t be there. Find out which type of insurance is best for you and shop around. The life insurance market is highly competitive, there are some good deals to be found.
Hello Katalina! You have very well summarized the importance of life insurance. I would like to contribute to your post with my understanding of Term Life and Permanent Insurance policies.
Term Insurance has a lower initial cost; however the premiums are only stay the same for a stated term – usually 10 or 20 years. The cost increases in a dramatic fashion after the term ends. If you don’t renew it your coverage ends and your premiums are gone. By contrast the initial premiums for a Permanent Insurance are higher than Term Insurance but your cost remains level.
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