One of the most important things you can do as parents is to
ensure the financial welfare of your children in the event of
your death. Life insurance is the best way to be rest assured
that your children will be taken care of if you die. Although
we never like to think of that kind of thing happening, but
it does.
What is Life Insurance
Life insurance is a policy that you can enter with your insurance
company, which promises a certain amount to your beneficiary(ies)
in the event of your death. Usually, a spouse will name the
other spouse as well as their children as beneficiaries of the
policy. As part of the agreement with life insurance, your insurance
policy will be a monetary value, that you will in return, pay
a monthly premium for. Premiums usually depend on your age,
gender, occupation, medical history and other factors.
There are other types of life insurance that may provide benefits
for you and for your family while you are still living. These
policies can accrue a cash value on a tax-deferred basis and
can be used for future needs such as retirement or your child's
education.
Do I Need Life Insurance
Earning an income allows you and your family to do many things.
It pays for your mortgage, buys cars, food, clothing, vacations
and many other luxuries that you and your family enjoy. However,
certain situations can cause you to lose your income, and those
who depend on you also depend on your income. If any of the
following statements about you and your family are true, then
it is probably a good idea for you to consider life insurance.
1) You are married and have a spouse.
2) You have children who are dependent on you.
3) You have a parent or relative who is aging, or disable and
depends on you.
4) You have a loved one in your life that you wish to provide
for.
5) Your 401K retirement plan, pension and savings aren't enough
to insure your loved one's future.
What Are My Life Insurance Options
There are four basic types of life insurance that can meet
you and your family's needs:
Term Life Insurance
This is the least expensive type of life insurance coverage,
and at least at the beginning, the simplest. Term life insurance
policies do not accrue cash value, and are fixed over an extended
period of time - usually one to 0 years, and they can be renewed.
This life insurance policy pays the beneficiary of your policy
a fixed amount in the even that you die in the period of time
that your policy includes. The premiums of term life insurance
are lowest when you are young and increase as you get older
Whole Life Insurance
This type of life insurance is similar to term life insurance,
as well as provides cash value. Over time, whole life insurance
generally builds up a cash value on a tax-deferred basis, and
some even pay it's policy holders a dividend. This type of life
insurance is popular, doe to the cash value that is accessible
to you or your beneficiaries before you die. Used to supplement
retirement funds, or to pay for your child's education, whole
life insurance should be used for protection, rather than for
accumulation.
Universal Life Insurance
This type of life insurance is a flexible kind of plan. These
policies accrue interest and allow the owner to adjust the death
benefits and premiums to their current life situation. You decide
the amount of premium for universal life insurance, and of you
skip a payment, this will be deducted from your death benefit.
Universal life insurance stays in effect as long as your cash
value can cover the costs of the policy. These rates are subject
to change, but they can never fall below the minimum rate that
is guaranteed when you sign up for universal life insurance.
Variable Life Insurance
This type of life insurance is designed for people who want
to tie the performance of their life insurance policy to that
of the financial market. The policy holder gets to decide how
the money should be invested, and your cash value has the opportunity
to grow more rapidly. However, if the market is poor, your life
insurance policy's death benefit will be poor. As with whole
life insurance and universal life insurance, you may withdraw
against the cash value. Be reminded that withdrawals of this
life insurance policy will be deducted from the cash value.
How Can I Save Money With Life Insurance
Below you will find some suggestions on ways to save money
while purchasing the life insurance policy that is right for
you.
1) If you don't need life insurance, don't buy it. Don't buy
more insurance that you actually need in order to provide financial
security for your family.
2) Shop around for competitively-priced life insurance policies
while you are healthy. Don't smoke, or do anything that might
increase your rates. Take care of yourself by exercising regularly
and maintaining a moderate and healthy weight.
3) If you purchase a term life insurance policy, look for guaranteed
and renewable policies. That way you won't have to periodically
continue to shop around for those life insurance policies.
4) You should only buy optional forms of coverage such as riders
only if necessary.
5) Shop around and compare life insurance policy rates and
coverage. There are thousands of life insurance companies to
choose from. It is advised that you get at least three separate
quotations of life insurance, and then decide which is the best
for you.
Brian M. Gardner is the Founder of Financial-Articles.com -
An Online Money Making Resource. Learn how to make money and
acquire wealth by investing in stocks and mutual funds, as well
as how to be successful in sales, marketing and advertising.
tp://www.financial-articles.com.
