Though it may not be a pleasant subject to discuss with your family, life insurance is something to seriously consider as an important part of one’s familial responsibility. Purchasing good life insurance coverage can assist in preparing all for the most devastating of events, providing surviving family members with the ability to be well cared for.
Generally, only those who are primarily responsible for the family’s income need be insured. It would seem to be logical but, in actuality, there are expenses like those of a funeral that need to be paid, among other things that are often unexpected. It would seem important for each person to obtain at least enough coverage to handle burial expenses.
Choosing the right amount of insurance coverage for you is contingent upon your take-home income, the number of dependents in your household, your typical current lifestyle costs and how much debt has been accumulated. According to many insurance pros, you should have coverage that pays out approximately five to ten times that of your annual income.
It is not such a simple exercise in choosing from what are really just four kinds of life insurance types.
The most common and economical is the term insurance policy, which insures individuals for a specific amount of time, as the name suggests. Most these insurance policies give a coverage span anywhere from 10 to 30 years. If the insured survives past the policy term, the policy will no longer pay out.
Whole insurance stays in effect until the death of the insured, assuming premiums are paid as agreed. This kind of policy also increases over time in cash value.
Universal insurance is sort of hybrid that has a mix of features from whole and term insurance. Any extra premium payments are credited toward the cash value in the policy.
And finally there is variable insurance, which serves as an investment vehicle that can help the policyholder build up a cash value over time. This policy type is closely tied to the stock market and thus fluctuates as do any stock investments. So, one should keep in mind that this insurance policy value can drop as quickly as it can rise.
How much one pays for this insurance will vary and depends upon the policyholder’s age and health and, of course, which of the four choices one opts for. Cost should not be the only thing taken into consideration when purchasing a policy. A good life insurance policy can be what financially saves your family and budget.