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A Basic Life Insurance Overview.
Life Insurance Quickguide: The Basics
A Basic Life Insurance Overview.
By: Kade Phillips, contributing writer at Kanetix.com.
What's the point of having life insurance?
Life insurance isn't exactly a popular topic of conversation around the dinner table or at a cocktail party, partly because buying a policy is a bit like betting against your own life. But life insurance certainly is an essential component of a financial plan, that seeks to protect your family and loved ones in the event of your untimely demise. If there are people that you truly care about, who would suffer severe financial hardship if the unthinkable should happen, life insurance is not something that you should ignore.
Do you have children or other dependents?
Life insurance is designed to help the people who depend on you for financial support, and while there's no law that says that you must have life insurance (some situations do require it though), it is the wise and loving thing to do to protect children and other dependents from financial hardship in the event of your passing and the loss of your income. When you get right down to it, taking out a life insurance policy is the best way to guarantee that your loved ones will be financially secure after your death.
How much life insurance do you need?
If you should die, the people named in your policy (the beneficiaries) receive payment for whatever the value of your insurance policy. Try to estimate the requirements of your loved ones in the event of your absence. When you decide to take out life insurance, choose a policy that meets your needs and has a premium that you can afford. The premium is the amount you agree to pay every year to the life insurance company, and keep in mind that coverage will likely cease if you miss payment. This is why it's important to make sure that you can afford the payments.
How much is it?
How much you will have to pay each year for your life insurance policy depends on several different things. Obviously, the higher your coverage, the higher your premium will be (a $1,000,000 life insurance policy will cost more than a $100,000 policy). But, it also depends on the type of insurance you choose, your age, and your health. Considerations like whether or not you smoke, or work in a dangerous profession, or are at a higher risk of disease will likely mean that you'll pay higher premiums.
Life insurance premiums for similar products can vary widely, so the best advice anyone could give you when you are considering how much you can afford, is to obtain quotes from a variety of providers.
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Disclaimer - The above description/explanation is intended as a guideline only, and is not to be interpreted as a recommendation to buy or sell any insurance products, or to provide legal or financial advice of any kind. Also, Kanetix Ltd. does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed.
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