Life Insurance: Everything You Need to Know
If you have a family, or someone else that depends on your income to live, life insurance is an absolute must. Too many families without life insurance lose one of the parents, and then the other parent has to work full-time and barely scrape by, it’s almost a financial death sentence. Even if you’re a stay-at-home mom, you need good quality life insurance, because if you’re not around to take care of the kids, there’s going to be added cost of daycare and much more. If you have a family, you absolutely need life insurance. Here’s some advice to help you find good quality life insurance?
How Much Life Insurance Do I Need?
You’ll want about eight to ten times your annual income in life insurance. The reason for this is that the goal of life insurance is to replace your income. If your spouse put ten times your income into a quality mutual fund that earns 10% each year, the investment are now making as much as you do when you’re working, and have a lot of money left over once the kids are on their own and no longer need your support.
What Type of Life Insurance Should I get?
Always get term life insurance. With term insurance, you’re paying for the cost of the insurance, nothing more, nothing less, and that’s all you need. Whole-life products include a savings program within the life insurance, but when you die, the amount of cash value you have in your policy disappears, and your family is only paid the face value of the policy. In addition, you’re not getting a very good interest rate on the money that’s in your cash value insurance, and you’re paying a lot higher fees than if you had just gone out in term insurance.
If you took the difference between the term insurance and the whole-life insurance, and put that money into a solid mutual fund, you would make the amount of money in your cash value several times over. And if the unfortunate were to happen and you were to die, your family actually gets to keep the money in the investment, rather than having the cash value of a whole-life policy disappear.
How Can I Shop for Life Insurance?
You can either look online, or visit an independent insurance agent. Usually going to an independent insurance agent is the best way to go, because they can compare a lot more insurance companies than you can and often get you a better deal. If a better deal happens to come up on life insurance, they’ll let you know.
If you don’t want to go out and visit an independent insurance agent, you can comparison shop online by visiting places such as IntelliQuote and SelectQuote. You just have to fill out a few simple forms and the websites will automatically find you the best deal on term life insurance.
When Can I Get Rid of My Life Insurance Policy?
You won’t need life insurance forever. If you happen to get divorced or be in a situation where no one else is dependent upon your income to live, you no longer need life insurance. You only need life insurance when someone depends on your income to pay for their basic expenses. If you were a single parent that now has two adult kids, you probably don’t need life insurance.
You also don’t need life insurance if you have a lot of money in your investments and would be able to live easily if one of the spouses weren’t around anymore. You would essentially be self-insured, and not need a sudden wind-fall of money if the father or mother in the family were to pass away.
Life insurance can be seen as a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated a sum of money in exchange for a premium, upon the death of an insured person. Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either regularly or as one lump sum. Other expenses, such as funeral expenses, can also be included in the benefits.
Who Doesn’t Need Life Insurance?
If you’re a single individual and no one is dependent upon your income, you don’t need life insurance. If you die, your estate will pay for any debts you have, and then you’ll get buried. That’s all there is to it, you don’t need to worry about leaving your relatives a huge sum of money if you were to die, there’s just no reason to do it.
You should also not get any life insurance on your kids. Gerber frequently promotes their cash-value insurance for children on television, and you should never buy these products. Children don’t need any life insurance, because they do not create any income for the family.