Do I Need Life Insurance?

Life insurance is a necessity these days to help families pay for funerals, outstanding debts and other expenses after a person passes away. Unfortunately, it's also one of the necessities that people do not think about until it's too late.

Types Of Life Insurance
Life insurance comes in many forms and the choices can be overwhelming for those who have never dealt with these different types of policies before. One of the most common types of life insurance is a term life insurance policy. With this type of policy, the insured simply makes premium payments for a preset number of years. If the insured passes away during the term of the policy, the beneficiaries receive the face value of the payout. If, however, the insured outlives the policy, there is no payout. This type of policy is typically used to pay off debts and mortgages in case of an early death.
Other types of life insurance: Mortgage Life Insurance, Universal Life Insurance?

Whole Life Insurance
Whole life policies are another popular form of life insurance and they provide permanent coverage until the insured dies. Another major difference between a term life and whole life insurance policy is that a whole life policy builds up cash value over the years and the insured can borrow against it or use it for emergencies. Whole life policies are typically more expensive than term life insurance policies, too.

How Much Life Insurance?
Deciding how much life insurance to get for yourself or a family member depends on the financial contribution to the household income. If you are the main contributor, a general rule is that you should have a policy on yourself that is between eight to 10 times your annual income. That means if you bring home $50,000 each year, you should have a life insurance policy with a face value of about $500,000. You should also consider funeral expenses and other expenses that your family may incur after your death, such as college tuition for your children and other necessities.

On the other hand, if you are getting a life insurance for a family member that does not directly contribute to the household income, you may want to consider a simple policy that pays for funeral and burial expenses. Also consider any debts or other expenses they are going to leave behind when deciding how much of a policy to get.

The Benefits of Life Insurance
The benefits of having a life insurance policy are obvious. For one thing, your family does not have to worry about how they are going to pay their bills and expenses if you contributed to the household income. Your life insurance policy should cover those expenses with some left over. A life insurance policy also reduces the financial stress that a funeral and burial can cause. Finally, the main benefit of life insurance is peace of mind knowing that you have prepared your family for your eventual passing.

Life insurance is an essential commodity in today's world. Don't put it off until it's too late. Start looking for a policy as soon as possible.