Life insurance is a necessary expense if you are the sole provider for your family or if anyone relies on you financially. Not having enough life insurance coverage can result in disaster for your family in the event of your death. Having too much life insurance can be a waste of money. Learn how to determine how much life insurance you need and what type of coverage is best for your budget, your family, and your stage in life.
Some people don’t need any life insurance. If no one depends on you financially, you may not need any life insurance at all. The purpose of life insurance is to protect your dependents against loss of income. If you are financially blessed, you may not need to carry a life insurance policy. If are married or have children or grandchildren that you support financially, then life insurance is a must.
Do the math and calculate how much life insurance you need. How much do your dependents need to live on? How many years will your beneficiaries depend on the funds dispersed by your life insurance policy? If you have small children, you will need a larger policy not only to cover living expenses for their care and upbringing, but also for big expenses like education.
Decide what kind of coverage will meet your family’s needs. Remember, insurance is a safety net in the event of your untimely death, not a financial investment. As you age, your life insurance coverage will decrease. For example, a 35 year-old male with three small children and wife who stays home to care for the kids will need more coverage than a 75 year-old widow who has no dependents. Once the kids are grown and on their own and your mortgage is paid off, you won’t need as much coverage.
There are three basic types of life insurance. Term life insurance is the least complicated. Term life insurance is comparable to monthly auto insurance. You simply pay the premiums on a monthly or annual basis. As long as you pay your premiums, you are covered. Once you stop paying the premiums, your coverage stops.
Universal life insurance allows the individual to adjust the premiums as well as the benefit paid to any beneficiaries. This is a very flexible type of policy and can be adjusted to suit your individual needs. Whole life insurance covers the insured for their entire life, not just the period during which the premiums are paid. This type of life insurance is usually the least desirable. The premiums are generally much more expensive than term or universal life insurance. Whole life insurance has some benefits. Whole life insurance builds cash value that can be borrowed against in the future. Also, if no changes are made to the policy, no future medical exams are needed to keep the policy in effect.
A life insurance policy will take care of your family and your dependents in the event of your death. Before buying a life insurance policy, take some time and learn the terminology and the different types of policies. Buying life insurance is a critical decision that will affect your loved ones for many years after you are gone. Take your time, do the research, and make informed decisions before deciding on a life insurance policy. Your family will thank you.
Dakkak Insurance 