Have you ever wondered why you would need life insurance? It seems like an extra expense that you might not need. Well, we can find another place for that money, and to be honest, we might not think much about it until we have a family and start building up assets. Life insurance is a policy, just like our auto or home insurance, that gives us more peace of mind that we will be taken care of financially if something bad happens. Life insurance lets our families take care of our final needs if we die. At the very least, this includes a burial or cremation, but it can also include more, depending on how much coverage we buy.
Since we live in an age where we can buy things on credit, we carry a lot of debt while we are working. This includes mortgage and car payments, as well as personal loans, credit cards, and student loans, to name a few. Most companies offer some kind of life insurance to their employees that can be bought at a cheaper group rate. This can be as little as a few dollars or as much as twice your salary, depending on your personal situation and the options you have. A lot of people prefer to buy additional insurance through their personal insurance agent. This can be done for different amounts of insurance coverage. This lets the surviving spouse or other family members pay for the funeral costs and any other debts of the person who died. Different people choose different amounts of coverage based on what they want to leave their loved ones.
Premiums depend on what kind of policy is chosen and how old the person is who wants insurance. We get mailers all the time about how we can get a lower rate on a policy if we act now. To be honest, all these terms can be a bit confusing. So, what's the difference between a whole life policy and a term policy? A term policy is when you buy a certain amount of life insurance for a certain amount of time, usually twenty years. During this time, the premium stays the same, and there is no cash value built up. On the other hand whole life insurance policies, do build cash value, and can be either borrowed against, or cashed in at various stages all through the policyholder's whole life. Before you can get coverage under some policies, you have to get a physical exam and fill out a medical history questionnaire. Usually smokers pay higher premiums as well as people with chronic illnesses that include high blood pressure or diabetes.
Life insurance is a good idea, especially if you don't want to leave your family helpless and facing bankruptcy because they can't make ends meet without you. There are some companies that only sell life insurance, and there are local insurance agents who can help you figure out what you need. Remember that the cost goes up as you get older, so if you want to buy a term policy, do it when you are young.
