Today is
By: Ikedi Ani-okoye.
Life Insurance
If you have people you share your life, life insurance can play an important role at virtually every stage of your life. This guide can help you make an informed choices when buying life insurance.
Why should you buy life insurance?
It is considered the pivotal point of financial planning by experts. If people are dependant on your income, life insurance will act as a replacement for that income. This usually relates to parents that have children but life insurance can also be a good choice with couple where there is a partner with a dominate income.
Life insurance can pay for burial expenses, probate and other administration costs, although medical expenses and debts are not covered.
Life Insurance can create an inheritance for immediate relatives or heirs
Life insurance can pay taxes for estates so heirs wont have to worry about getting a smaller inheritance. And between now and 2011 federal tax rules are likely to decrease these amounts further.
If you make a charity the beneficiary of your insurance you can donate in effect your life savings to them. There are also life insurance policy that can be cashed out if not used for any of the above expenses.
How much to buy
How to buy, and the amount of life insurance to buy
If you have no dependants you are unlikely to need it, unless you would like to donate it to a charitable cause. You should plan to replace “hidden income” lost at death. This income that you receive through your employment that is not part of your gross wages. It may include things like your employer’s subsidy of your health insurance premium, and many other “perks,” large and small. This is an often forgotten about insurance need: the cost of replacing just your health insurance and retirement contributions could be the equivalent of $2,000 per month or more.
Which type of product to buy
There are 2 major types of life insurance whole life and term insurance. Whole has other categories such as traditional whole life, universal life, variable life and variable universal life. 2003 6.4 million policies bought were term and 7.1 million were whole life. There are differences in life insurance for groups and life insurance for individuals, we will deal with the indivisual here..
Term insurance for individuals
This usually covers a 30 year period and pays out only if death occurs during that period. There are two types of this type of life insurance: Level term-the death benefit remains the same through out policy; Decreasing term-benefit drops usually on a yearly basis. Most of this type of insurance bought is Level term.
Whole life insurance for individuals
This Life insurance in the USA pays when the policy holder dies, even if that’s at 138! There are 3 types; Traditional, universal and variable universal. Traditional-death benefit and premium remain the same, generally. The cost per $1000 of benefit increases with age.
which one of the hundreds of life insurance companies to choose.
Shop around and look for the best possible deal and always check with the state insurance department before getting a deal with any insurance company they will verify that the company is licensed.
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