Life Insurance
If someone depends on you financially, chances are you need life insurance. Life insurance provides cash to your family after your death. This cash (known as the death benefit) is intended to replace your income so that your family can meet important financial needs like living expenses, house payments and college savings.
Most Americans need life insurance. To figure out if you need life insurance, you need to think through the worst-case scenario. If you died tomorrow, how would your loved ones fare financially?
There are many kinds of life insurance, but they generally fall into two categories: term insurance and permanent insurance.
Term insurance is designed to meet temporary needs. It provides protection for a certain period of time only (the "term") and generally pays a benefit only if you die during the term. This type of insurance often makes sense when you have a need for coverage that will disappear at a specific point in time. For instance, you may decide that you only need coverage until your children are old enough to support themselves financially.
Permanent insurance on the other hand provides lifelong protection. As long as you pay the premiums, the full face amount will be paid. Because it is designed to last a lifetime, permanent life insurance accumulates cash value and is priced for you to keep over a long period of time.
It's impossible to say which type of life insurance is better because the kind of coverage that's right for you depends on your unique circumstances and financial goals. It is also difficult to determine the amount of life insurance you need. However, the question isn't how much life insurance you need, its how much money your family will need after you're gone. Determine how much money your loved ones will need after meet immediate expenses, like funeral expenses and debts? Then calculate how much money they will need to maintain their lifestyle without you. These are not easy decisions to make on your own. The best way to make these decisions is to retain the assistance and advice of a life insurance broker.
It is more important to choose a competent life insurance broker when buying life insurance than and for any other type of insurance. This is because that while most car insurance policies are the same, life insurance policies differ significantly in terms of what they cover, what benefits are offered, when the benefits are paid, and other key coverage items. When choosing a life insurance broker, obtain recommendations from friends and family. Ensure that the broker is a licensed life insurance agent and in good standing with organizations such as the Better Business Bureau.
As always, consult with your insurance agent for advice.