What is Life Insurance?
Life insurance is a contract between the insurance company and the owner of the insurance policy.
The insurance company agrees to pay out a death benefit to a beneficiary upon the death of the insured person, in return, the policy owner agrees to make regular premium payments to the insurance carrier for a specified period of time to maintain the life insurance coverage.
The proceeds paid out from a life insurance policy usually go to the beneficiary free from federal income tax.
The beneficiary can use the money any way he or she chooses.
Many people choose to get life insurance to replace lost income of the main bread-winner of a family. It provides financial security for your family’s future.
And, most people over-estimate the actual cost of life insurance by 200% or more. Yes, it can cost a lot less than you think to get the life insurance you need.
Types of Life Insurance
There are two basic types of life insurance: Term and Permanent.
Term insurance offers the largest amount of coverage for the lowest cost.
You can select term life protection for a specific period of time, called the "term" of your policy.
You may select a term of 10, 15, 20, 25 or 30 years of coverage.
The longer your "term", the higher the annual cost of insurance.
If you pass away during the "term" of your insurance, the death benefit is paid to your beneficiary, free from federal income tax.
Permanent life insurance provides lifetime protection and may build up some cash value inside your policy over time, from which you may take a loan.
Which Type of Life Insurance is More Affordable?
Term insurance costs a lot less (up to 2-3 times less) than permanent insurance.
If you need life insurance for a period of 30 years or less, term life offers the best option.
Term life is affordable, flexible, and easy-to-understand.
How Much Life Insurance Should I Get?
One of the most important considerations in purchasing a life insurance plan is determining how much coverage you really need.
Of course, you don’t want to pay for more insurance than you actually need, but you want to make certain you have enough protection to accomplish your goals.
In order to decide on the right amount of life insurance protection to purchase you’ll want to consider what goals you want your insurance to accomplish and how much money it will take to accomplish your goals.
Some Reasons to Buy Life Insurance Include:
You’ll also want to consider your total assets, your total liabilities, your annual income and your financial goals.
Look at how much money you have saved, how much you owe, how much you will earn each year, and what savings goal you have for your future and retirement.
Then consider how much you need to provide for your loved ones via life insurance to accomplish those financial goals should you pass away.
The quickest and easiest way to determine how much life insurance coverage you really need is to use a life insurance need calculator.
By using the needs calculator, you just answer some basic questions about your finances and click on the button to get an instant, accurate estimate of your life insurance needs.
Life Insurance Quotes
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