We are writing this article because we know insurance can be a complicated subject. Hopefully this review will help you make an educated decision about Life Insurance and whether you need or not.
The first, and most obvious, reason for Life Insurance is the fact that if you die your dependents will be left with an income to survive. As a primary bread winner of a family, ones income can be a great deal. If that person should pass the family needs something to help them get through the tough times and figure something out.
There are two types of Life Insurance out there today. There is a term life insurance policy and whole life insurance policy.
Term life insurance would cover you for a set number of years. Generally speaking it’s about 10 to 30 years long. These types of policies only pay benefits during the term period that the insurance plans you choose covers.
Whole life insurance is permanent life insurance there are a few different types of whole but the general idea is that when you die your beneficiaries will receive an income. Obviously, the amounts of the premium and the policy will depend on what you purchase.
Another way of looking at life insurance is from an investment standpoint. Variable life insurance is a type of insurance who an individual can still invest into stocks, bonds and mutual funds. This can help you build a strong investment portfolio and make your money grow even quicker. However, there are some investment risks so you need to choose wisely and do some homework. One of the pros of variable life is that you can choose a minimum death benefit that will guarantee paying your beneficiaries something should your investments sink.
Furthermore, if you ever become terminally ill and need some quick cash to cover some medical bills you can sell your life insurance policy. This can be sort of tricky because you need to find a settlement company that would be interested in paying your premiums and collecting the face value of the plan upon your death.
Another type of life insurance is called a Universal Life Insurance policy. Universal life insurance can be used to set aside a portion of your premiums to a cash-accumulating vehicle. This can be looked as a reserve just in case you need some quick cash. The only catch here is you need to make sure that the cash available can prevent the policy from being dropped due to unavailable cash.
The nitty-gritty of the matter is you have to look at the numbers and find a plan to suite your need. You have to think about how much money your make and if you should die how long would you need to replace your families’ income. Also if there are certain things like paying for funeral or college tuition to pay for you can set aside certain things get paid off first.
The bottom line is that it’s not for everyone, but if you should choose you have to do some research and sit with more than one financial advisors to see what plans you find. If used properly it can be one of the best financial steps a family can take.