They say nothing in life is certain but death and taxes. They also say leap and the net shall appear. Either way, if you believe it’s better to be safe than sorry, there is life insurance, which is a way of installing your own net and ensuring financial security for those you love even after you’re gone. Life insurance can help provide protection for your family and peace of mind for you.
What is Life Insurance?
Generally described as something you buy in order to financially protect the ones you love, life insurance has been defined as “a contract between an insured (insurance policy holder) and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the “benefits”) upon the death of the insured person.”
That’s a mouthful, so another way of putting it is to say that a life insurance policy will pay your spouse, children or others you designate as beneficiaries a lump sum of money in the event you die in a covered event while your policy is in effect.
Types of Life Insurance
There are many types of life insurance (term, universal, whole life and endowment just to name a few), and they may be divided into two basic classes: temporary and permanent. An example of temporary would be the Annual Renewable Term, which is a one-year policy with a premium set for the applicant’s age at that time. Conversely, life insurance that remains active until the policy matures, and a payout is given, is an example of permanent coverage.
With other factors to consider such as the face amount (the amount of money to be paid out to your beneficiaries upon your death in a covered event), the premium (the amount the policyholder must pay to keep the policy in force, and the term (the amount of time a temporary policy will last), it can help to consult a professional to determine which policy is best for you.
Meanwhile, if you want to educate yourself on the basics, there are many resources available online, including articles and online calculators for estimating how much money you’ll need. Resources abound to help you make an informed decision.
Is Life Insurance for Me?
Many consumers wonder if they really need life insurance. Let’s face it: Talking about or planning for our own death is not the most pleasant topic to consider. If you have a spouse, children or others who depend on you financially, you should strongly consider getting a life insurance policy to help protect their futures in the event you die.
And if that’s still not clear enough, think of it is as if you’re preparing for a big trip. Are you the type of person to begin with an empty or full tank of gas? If your answer is full, then life insurance may be for you, especially when considering it’s your family that will be driving that car when you’re gone.
The more prepared you are the better, especially if somebody depends on your income, for mortgage, tuition, groceries, etc. If and when your income disappears, life insurance can help serve as an income replacement and that may be money well spent.
Unpleasant as it may be to think about, it’s better to think about it now because later may be too late.
– By Samantha B. Rivers, Editor