Life insurance policies are designed to protect your family by providing financial compensation after your death. While it is an unpleasant prospect to consider, purchasing life insurance is an important responsibility, particularly when you are the head of your household.
The amount of life insurance each family needs will vary greatly. At a minimum, life insurance should cover the cost of funeral expenses and provide enough income to support your surviving family members during the transition period after your death. You may also want to allow enough money to cover important expenses, such as your mortgage or college tuition for your children.
Different types of policies are designed to meet the needs of any family. The policies are divided between two types: term life insurance and whole life insurance.
When purchasing term life insurance, you are buying protection for a specific period of time. The term can vary, but it is commonly sold in increments of five, 10 or 20 years. At the end of the term, you have the option of renewing the policy. The policy holds no cash value.
Term life insurance may be offered through your employer as part of your total compensation package. Often the policy begins with a payout that is equivalent to your annual salary. Supplemental insurance can be purchased to increase your amount of coverage, though you may need to pass a physical examination.
Whole life insurance, also known as permanent life insurance, has no set time period. You will be protected as long as you hold the policy. Whole life insurance also has the benefit of holding cash value. The money you pay through your monthly premiums can later be cashed out if you decide to sell the policy.
Whole life insurance is more expensive than term life insurance. While it does have a cash value, it is not always the best financial option for everyone. An insurance expert can help you review your needs to decide which type of insurance is best for your family.
From a decline in doctors due to Baby Boomers retiring, to changes in healthcare legislation and healthcare reforms, members of Generation X should pay close attention to healthcare plans and the state of the healthcare industry. |
Since life insurance often goes unclaimed, you may find unclaimed life insurance policies within your family. |
Seniors have several over-50 life insurance options, but they need to compare prices and look for discounts. |
Check out our life insurance guide to get helpful advice on everything from comparing whole versus term life insurance to the advantages of whole life insurance to getting life insurance with no medical exam to understanding the taxes associated with life insurance and more. |
In general, your beneficiaries will not have to pay taxes on life insurance benefits, but there are some rules to follow. |
The advantages of whole life insurance vary greatly from those of term life. |
Learn about the differences between term life insurance and whole life insurance, and how they affect costs. |
You can get life insurance with no medical exam, but you will still need to answer health questions. |
What is term life insurance? An option for providing financial security for your family in the event of your death. |
