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The Importance of Life Insurance

Mortality is a universal truth. Everybody who is born is bound to die one day. The Bible puts it this way in Hebrews 9:27  “it is appointed unto men once to die, but after this the judgment.” But the sad part is that most of the people do not prepare for this eventuality.

Life InsuranceRealizing that our time is limited, it is of utmost importance to minimize the pain of our loved ones after we are gone. No matter what age you are or how expected (or unexpected), when one dies the family is bound to suffer from deep emotional trauma. Along with emotional trauma one will certainly not like to add financial trouble. Financial difficulties multiply the emotional stress of your passing. In addition, there are funeral expenses which have to borne by the family after one dies. In a recent article, , we noted that 44% of Americans live from paycheck to paycheck, so how are they to survive with one less paycheck and additional funeral expenses?  But if they are protected through proper planning, then the adjustment will be much easier.

Hence, good financial planning is an important step in providing for your family and good life insurance coverage is a must for the future of your family. No matter what your age or family financial condition, insurance coverage can play a part in the safe future of the family. Even if you are not living from paycheck to paycheck life insurance can play a part in good Estate Planning. Small business owners can use insurance to help ease the transition to new management or help cover estate taxes. Families can use it to cover funeral expenses and provide for college for the children or just to ease the transition and provide the support you would have, had you been there.

Choosing the Right Insurance Coverage

Once you have decided to choose additional life insurance, the next point that comes to mind is what kind of insurance policy to be selected? Online quotes can help to compare various deals and choose the best one. It is always wise to compare insurance reviews online so as to decide which insurance policy will be the right one for you and your family. Term policies are the cheapest and provide “Pure Insurance”  and are chosen by a number of people who just want insurance coverage.

Following are various kinds of term insurances that one can choose from:

  1. Level-term insurance: some of the level-term insurance policies come with fixed guarantee premiums while some of the policies vary as per the terms and conditions of the companies. The benefits after the demise remain constant for the entire policy term.
  2. Diminishing term policy: it is also called mortgage shield policy or “mortgage insurance”. In this kind of policy, the amount of policy is directly linked with a specific mortgage. This simply means that as the mortgage balance diminishes, the amount paid by the insurer also diminishes. This policy is for people who want to make sure that the mortgage is paid off in case they die. Often they are offered by banks tied to the loan but generally the commissions and fees are higher so you can usually buy a straight term policy for less and actually have benefits left over as the mortgage balance decreases.
  3. Rising term policy: this policy can be taken as a supplement to another policy. This policy is also known as “Return of Premium” policy. According to Wikipedia “Return of premium life insurance is a type of term life insurance policy that returns the premiums paid for coverage if the insured party survives the policy’s term. For example, a $1,000,000 policy bought for $10,000 a year over a 30 year period would result in $300,000 being refunded to the surviving policyholder at the end of the 30 years.”

The policy should be reasonably priced and not unaffordable, because an unaffordable policy is likely to get ignored. A best policy is one that covers all the requirements without making a hole in the pocket. One can go through various online policies and can conveniently choose the best amongst them.

You Might Also be interested in:

Insurance for Dummies Questions and Answers on Life Insurance: The Life Insurance Toolbook New Life Insurance Investment Advisor: Achieving Financial Security for You and your Family Through Today’s Insurance Products The AARP; Retirement Survival Guide: How to Make Smart Financial Decisions in Good Times and Bad