It's not a big deal to live forever. Just think about waking up on Monday every week for the rest of eternity. Only two things come to mind as benefits of living forever: you could start reading "War and Peace" and know you would have time to finish it, and you wouldn't need life insurance. But since we're just regular people, we probably shouldn't start a very long book and should get life insurance instead, since none of us knows how long we have.
This is not very happy advice, but it is very useful. Can you really face the idea of leaving this world and leaving behind only memories of yourself? If you have a family or other people who depend on you, you must plan for their future, especially if you are the main source of income. Anyone would have a hard enough time dealing with the loss itself without also having to worry about how they will pay their bills and maybe even think about losing their home.
So, if you don't have enough life insurance or if you don't have any at all, you should do something right away to fix the problem. Maybe you've thought about it and even looked at what's out there, but you haven't done anything yet because there are so many choices and it's hard to decide which one to go with. This is totally understandable, since there are so many different options that anyone could be forgiven for being confused. However, putting things off won't feed your family after you're gone.
So you need to know something. Here is a general overview of what you can get, which should help you figure out which types of coverage may be best for your needs. We don't go into a lot of detail because that's best left to the experts. When you go to them, you should have a general idea of what you're looking for and, just as important, which types won't work for you.
Most needs are likely to be met by one of the types of term insurance. Its name tells you that it covers you for a set amount of time that you and the company that gives you the policy agree on. At the end of that term, there is no more coverage and no cash value. When the insured person dies, the policy will usually pay out in one lump sum.
Under the general name "term insurance," there are many different kinds of coverage. Here are some of the most common ones.
Family Income Benefit is one of the best programmes, and it must have been made with families who have lost a loved one in mind. If the policyholder dies during the insurance's term, a tax-free amount will be paid out every year until the end of the term. The costs for this type are low because the length of time over which payments are made is always getting shorter.
Level term insurance is simple to understand. It's a good way to cover the capital part of a "interest-only" mortgage because the value of the cover is set at the beginning and stays the same for the whole term.
A Decreasing Term policy, on the other hand, is better for covering a mortgage that is paid off over time because its value goes down over the term until it is worthless at the end. This is similar to how the mortgage balance goes down over time. The premiums are low because of this.
During the term of an Increasing Term mortgage, the value stays the same because inflation is taken into account. This type of mortgage is best for meeting a lump sum need at a constant value. So, the premiums are also very high.
Last but not least, it's important to talk about Whole of Life coverage, which is not really term insurance because the coverage lasts as long as the insured person does, as long as the premiums are paid on time. When the insured person dies, the insurance company pays out the insured amount plus the value of any benefits the investment has earned.
The examples above give you a general idea of some of the policies that are out there and should help you talk to a broker about your needs in more detail. There's a good chance that you'll need more than one type of coverage to meet all of your needs. You can find brokers on the internet, which is a great place to look, and they'll help you figure out what you need.
Once you're settled, you can relax knowing that you've taken care of the needs of those who depend on you. If you're feeling really brave, you could even start reading "War and Peace."
