Life Insurance

Purchasing Life Insurance is a
Responsible Commitment

Life insurance is an important component of personal finance. But life insurance is one of those things that could be seen as an extra expenditure that you really might not need. Right? We can always find somewhere else for that money to go, and the truth is, we may not really give it much thought until we have a family and start accumulating assets. Life insurance is simply an insurance policy which provides us with extra assurance that if something happens we will be covered financially. In the case of death, life insurance allows our family to take care of our end of life needs, such as burial or cremation at the least, and more depending on how much coverage we purchase.

Since we live in the age of credit purchases, we carry a considerable amount of debt through our working years. We have a mortgage and car payments, as well as personal loans, credit cards, and student loans, just to name a few. Most companies offer their employees some type of life insurance coverage that can be purchased at a reduced group rate. The benefit may be a small amount or it may be twice your salary. It just depends on your individual situation and which options are available to you. Many people opt to buy life insurance through their personal insurance agent. Additional insurance can be purchased for varying amounts of coverage. . This will allow the surviving spouse or family members to cover burial expenses and any other outstanding debts of the decedent. Amounts of coverage vary and are chosen based on what the individual would like to provide his or her survivors.

Premiums are based on what type of policy is chosen and the age of the person seeking coverage. We are always getting offers in the mail for a reduced rate policy if we act now, and frankly, all those terms can be somewhat confusing. What is the difference between a whole life policy and a term policy? A term policy is just that; you are purchasing a certain amount of life insurance for a specified term, usually twenty years. The premium stays the same throughout this time period and does not build any type of cash value. Whole life insurance policies on the other hand, do build cash value, and can be borrowed against, or cashed in at various stages throughout the policyholder’s whole life. Some policies require a physical exam and medical history questionnaire to be completed before coverage can be instated. Smokers as well as people with chronic illnesses, such as high blood pressure or diabetes, traditionally pay higher premiums.

Life insurance is a good idea, especially if you do not want to leave your family financially devastated facing bankruptcy because they cannot make ends meet without you. There are many companies that specialize only in life insurance, and local insurance agents that can help you clarify exactly what you need. And the older you get, the more the premium costs, so if you are considering a term policy, its better to buy while you are younger!