Learn the Basics of Life Insurance to Help Protect Your Family
Purchasing life insurance as part of your advance planning for the welfare of your family could well make this very important and final aspect of your lifetime on earth much less worrisome since you will know that your dependents are going to be taken care of.
Who Needs Life Insurance?If you have no dependents or have sufficient wealth stored up to pay off your family home’s mortgage and to take care of all other debts, as well as probate and funeral costs, you might not need life insurance.
Nevertheless, if that is not the case, and you are your family’s primary financial provider with the income that you earn from working, then you might want to consider for a long moment what would happen if you died and left your family or dependants without their current source of income to sustain them.
Basically, having purchased a reasonable amount of life insurance to protect your dependants in case of your untimely death could not only be very prudent, but it might end up being downright essential to their well being in the wake of your passing.
Remember, the event of your death would probably be a time when your loved ones are likely to be especially vulnerable to grief and depression as a result of losing your company and financial support.
The Two Basic Types of Life InsuranceIf you now think that life insurance may be suitable for you as a means of protecting your loved ones from financial stress after your death, you might benefit from knowing that life insurance comes in two basic flavors. These are commonly known as term life insurance and permanent life insurance.
Perhaps the most economical type of life insurance is term life insurance. This popular type of life insurance is generally purchased for a specific time frame or term, such as ten or twenty years. Term life insurance is often used to cover the time period until the mortgage on the family home has been fully paid off, so if you have 15 years left on your mortgage, consider buying a term life insurance policy that provides coverage for a 15 year period.
The other primary type of life insurance, which is typically known as permanent life insurance, has a cash value that allows its purchaser to accrue savings and earn interest on those funds over time. This type of life insurance policy is less popular than term life insurance perhaps because it involves paying higher premiums. Nevertheless, since commissions are higher, you might find a life insurance salesperson pushing you towards purchasing this type of policy.
It therefore usually makes good sense to research the type of insurance that would suit you best independently, rather than just taking an agent’s advice.
By InvestorGuide Staff