Life Insurance, Who Needs It?

Life insurance is insurance that financially protects the beneficiaries of the insurance policy, typically immediate family members of the policy holder, upon the death of the policy holder. People often wonder who actually needs life insurance and the best way to answer that is with another question: who doesn’t need life insurance? Of course unless a person has no immediate family dependent upon him or her for financial provision, it is advisable for most people to have at least some life insurance.

What Does Life Insurance Pay For?

Essentially life insurance aims to provide financial security to surviving members of your family after you pass away. Therefore, it is important to consider your budget and financial situation in conjunction with the standard of living that you want your family to be able to maintain after you are gone in order to determine how much life insurance you should purchase. There are a number of factors to take into consideration such as medical and funeral expenses, relocation costs, and ongoing expenses such as mortgage or rental payments, car payments, and children’s education costs.

Are All Life Insurance Policies the Same?

There are a number of different types of life insurance including term, permanent, and whole life insurance.

  • Term Life Insurance provides coverage for an agreed upon period of time, or term. The specifics of term life insurance are generally very minimal and usually offer protection only in the event of the policy holder’s death. Unlike other kinds of life insurance policies, there is no accumulation of cash value in term life insurance.
  • Permanent Life Insurance offers coverage that stays active until the policy reaches maturity. The policy cannot be canceled by the insurance company for any reason (short of fraud) and accumulates cash value. This accumulation reduces the insurer’s risk and consequently the cost of the insurance over time.
  • Whole Life Insurance often has higher premiums attached to it than term life insurance policies relative to the age of the policyholder at the time the policy goes into effect. However, whole life insurance provides lifetime coverage of death benefits without an increase in the monthly premium. They also often include entitlement of the policyholder to a cash value reserve which is accessible at any time in the form of policy loans and are not subject to income tax.

How Do I Choose the Right Life Insurance Policy for Me?

When deciding on a life insurance policy to purchase it is important to keep a few things in mind in order to ensure that you are getting the right policy for you and your family. First and foremost, when working with an insurance agent, be sure that they are able to thoroughly explain your options and why those options would be right for you based on your finances and standard of living. It is also a good idea to get quotes from multiple insurers in order to be able to fully weigh your options. Additionally, while you certainly want to buy sufficient coverage be sure you do not purchase what you don’t need. In other words, don’t “over buy”. Extra “bells and whistles” in your policy that don’t need to be there can raise your monthly premiums to the point that they are unmanageable. No one ever wants to have to use life insurance because no one wants to leave their loved ones before their time. But if it does happen, it is important to ensure that they will be taken care of well into the future.

Life Insurance Generational Family

Give Ankley Insurance Services a call today to help you find a Life Insurance plan that best fits your needs and your budget.