Why Do You Need Life Insurance?


Imagine this situation. It is a quiet and rainy night. The dinner you have prepared all afternoon is still sitting untouched in the dining room. You wait anxiously wondering why your partner is late. Did he stop to get wine? Did he get a flat tire? But all of a sudden the unimaginable happens. You look down at your phone, but have not choice to answer it. You get the call.

We cannot predict the future. Life, as has been stated time-and-time again, just happens. If you are in a situation where someone may suffer financially from those life just happens situations, chances are you need life insurance. Life insurance is a way to keep your family or your partner protected. It gives them a safety net that provides cash to the people you care about after your death. This cash, also known as death benefit, replaces your income and helps aid your family meet many important financial needs such as funeral cost, daily living expenses, college funding, and much more.

So what is life insurance? Life insurance is cash that is given to your family after your death. Many people do not necessarily understand the ramifications of what happens when a loved one passes away, but the story is usually the same with bills and expenses. For most Americans, especially newlyweds, married partners with kids, and single parents, life insurance is a necessity. Think about the worst-case scenario above. This isn’t something that happens in the movies. It happens almost every day. We cannot predict what will happen, but we can control our future our family’s future through life insurance. This will provide your family with the protection that they need to pay any final expenses and set them in a well-grounded place. Funeral cost, medical bills, taxes are not cheap. Other expenses such as living expenses, rent, mortgage, and even food eventually become a drastic financial factor once a loved one dies. Having this safety net will help ease your mind especially in such a difficult situation. The last thing you would want to think about after your partner passes away is the financial difficulties that are foreseen in your future. Let life insurance help make sure that the people you care about are financially taken care of even when you are not there.

Married Couple

Just because you do not have kids does not mean you do not need life insurance. This is a mistake. As discussed, what would happen if you get that call? What would happen if you find your partner in the hospital bed with the doctor saying those fatal words of, “there is nothing we could do?” When entering a marriage, you need to think about your family’s future. Whether or not you have a family, this is an important step in keeping them secure. Take into consideration both of your income. Will it be enough to pay off the expenses of a mortgage, credit card bills, and car loans? If not, take a look at the various life insurance packages that can keep your family safe.

Married with Kids

In today’s world, families with kids, especially more than one, usually depend on two incomes to make ends meet. The expenses of the mortgage, cars, and the necessities for your kids are just the tip of the iceberg of what you need to pay for their future. Investing in life insurance, especially for this situation, is your best possible option. Here, you need to think about the future and the future expenses they will have to endure with or without you. To make sure that they are secured, life insurance will provide the financial funds needed in any type of situation.

Single Parent

As a single parent, there is much responsibility on your shoulders. You are the mother, the father, the breadwinner, the hero, the villain, the cook, and the chauffeur in your kids’ world. To make sure that you your child is safeguarded by those financial expenses, think about their future and invest in life insurance. It will give you a peace of mind knowing that whatever happens, your child’s future is set.

Life Insurance: Types of Policies

When it comes to life insurance, there are many different policies that you should be aware of before choosing which option is best for you. Whether you are sick and need a certain amount of time dedicated to your insurance, or if you want a more permanent type of life insurance, there are various types you can choose based on your circumstances. Here are some of the options you can choose from:

1. Whole Life: This is a permanent insurance policy that combines life coverage with an investment fund. If you choose this option, you are buying a life-insurance policy that incorporates a fixed payment amount on your death. In addition, part of your premium goes into building cash value from investments made by the insurance company.

2. Universal Life: This is another type of permanent insurance policy that includes term insurance with a money market-type investment that pays a market rate of return. In order to gain a higher return, these kinds of policies usually do not guarantee specific rates.

3. Variable Life: Variable life, along with variable universal life, are both permanent policies with investment funds that correlate with a stock or bond mutual-fund investment.

4. Term Life: Term policies have zero investment components. This option includes coverage that lasts for a certain period of time that can be renewed each term on an annual basis. Keep in mind, you do not have to requalify by providing evidence of good health every year.

For more information to find out which type of life insurance is best for you, please take a look at CNN’s article here.

4 Important Tips When Deciding On A Life Insurance Policy

Life insurance is a safety net for your family in the event of an unfortunate death. It provides them with the necessary financial security to keep life as normal as possible while trying to cope with your passing. Before you pick a life insurance plan, it is important to understand the basics and what type of policy is best for you and your family. Here is a list of four important tips that will help you make your decision.

1) Understand the Benefits

There are several great benefits to owning a life insurance policy. It is an essential part of any financial portfolio and can help keep your family strong even after you are gone. A life insurance policy can cover any expenses related to your death as well as pay off any remaining debts. The great thing about a life insurance payment is that you can receive a lump sum payment, which is typically tax-free and free from estate tax. In addition, the money accrues in value as you contribute to your policy.

2) Understand the Type of Policy

It is important to understand the options that you have when choosing a life insurance plan. There are two different common policies you should understand, life and whole life. A life plan tends to be the cheaper option because it can expire before the benefits are fully used. A typical life plan comes with a 20-year vesting period. On the other hand, a whole life policy would cover you throughout your entire life. In addition, you can borrow against the whole life plan once it has accrued in value from your payments.

3) When to Choose Term Policy

You should consider a term life insurance policy if you feel as though you only need to be covered for a specific period of time. Term life insurance allows you to match the length of the policy to the number of years you want to be covered. This is a practical policy for parents with children that want to ensure they are protected until they know their kids will be financial stable themselves. Once your children have grown up and moved out of the house, the insurance policy may no longer be required, making a term policy a good fit.

4) How Much Do You Need?

The most difficult question to answer when choosing a life insurance policy is deciding how much you should buy. The answer to this question will be different for every individual and depends on your own situation and lifestyle. In order to help get a better idea of what make sense for you and your family, check out this Bankrate insurance calculator.

Life Insurance: Are You Covered?

Life insurance can sometimes be a touchy subject. No one wants to necessarily think about dying and therefore may be tempted to just ignore the subject. However, ignoring the importance of life insurance will not magically help you live forever. As much as we may wish that was the case.

You should really be thinking about your family as opposed to yourself when it comes to life insurance. If an unfortunate event were to happen, you need to be properly insured so that your survivors have the necessary financial security to avoid any additional burdens on top of the agony of your death.

There was a recent Bankrate study which found that 37% of Americans with children who are under 18 years old do not have life insurance. Furthermore, for those who do have life insurance, roughly 32% of parents have no more than $100,00 worth of protection. And while some is better than nothing, this amount is still barely enough to protect a family.

The $25,000 to $100,000 policies may be able to pay for funeral expenses, but unfortunately they will not be enough to pay off a mortgage or but a kid through college.

Determining the proper amount of life insurance coverage to purchase can be complicated, especially because it all depends on your particular life situation. Factors that should be taken into consideration include: debts, mortgage, potential college costs for children, burial expenses as well as age, age of your spouse and children, and your income. Considering checking out Bankrate’s life insurance calculator to help determine a sufficient amount of coverage.

There is also the decision on the type of policy you should purchase, which is also dependent on your personal circumstances and factors mentioned above. These options include a whole-life, term, or combination policy. It is helpful to separate the planning for your spouse from the planning for your children because the timeline for the necessary coverage for each may differ.

Hopefully this gets you thinking a little bit more about your life insurance coverage and the financial security of your family. Although it is certainly not the most enjoyable conversation, nonetheless it is an important discussion that you and your spouse should be having.