Buying life insurance is not like any other purchase you will make. When you pay your premiums, you're buying the future financial security for your family that only insurance can provide. Among its many uses, it also helps ensure that, when you die, your dependents will have the financial resources needed to protect their home and the income needed to run a household. Choosing an insurance product is an important decision, but it often can be complicated. As with any major purchase, it is important that you understand your needs and the options available to you.
Life insurance also can be used to help with other financial goals, such as funding retirement or education expenses. However, it is important to remember that the main purpose of life insurance is financial protection. If your primary goals are something other than protection, you should consider what other financial products are available to meet those goals.
It is an essential part of financial planning. One reason most people buy life insurance is to replace income that would be lost with the death of a wage earner. The cash provided also can help ensure that your dependents are not burdened with significant debt when you die.
The proceeds could mean your dependents won't have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that no income tax is payable on proceeds paid to beneficiaries.
Before buying you should assemble personal financial information and review your family's needs. There are a number of factors to consider when determining how much protection you should have. These include: any immediate needs at the time of death, such as final illness expenses, burial costs and estate taxes; funds for a readjustment period, to finance a move or to provide time for family members to find a job; and ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement.
Although there is no substitute for a careful evaluation of the amount of coverage needed to meet your needs, one rule of thumb is to buy the right insurance that is equal to five to seven times your annual gross income.
Term insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. Some term insurance policies can be renewed when you reach the end of a specific period which can be from one to 20 years. The premium rates increase at each renewal date. Many policies require that evidence of insurability be furnished at renewal for you to qualify for the lowest available rates.
Life insurance also can be used to help with other financial goals, such as funding retirement or education expenses. However, it is important to remember that the main purpose of life insurance is financial protection. If your primary goals are something other than protection, you should consider what other financial products are available to meet those goals.
It is an essential part of financial planning. One reason most people buy life insurance is to replace income that would be lost with the death of a wage earner. The cash provided also can help ensure that your dependents are not burdened with significant debt when you die.
The proceeds could mean your dependents won't have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that no income tax is payable on proceeds paid to beneficiaries.
Before buying you should assemble personal financial information and review your family's needs. There are a number of factors to consider when determining how much protection you should have. These include: any immediate needs at the time of death, such as final illness expenses, burial costs and estate taxes; funds for a readjustment period, to finance a move or to provide time for family members to find a job; and ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement.
Although there is no substitute for a careful evaluation of the amount of coverage needed to meet your needs, one rule of thumb is to buy the right insurance that is equal to five to seven times your annual gross income.
Term insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. Some term insurance policies can be renewed when you reach the end of a specific period which can be from one to 20 years. The premium rates increase at each renewal date. Many policies require that evidence of insurability be furnished at renewal for you to qualify for the lowest available rates.
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