Life Insurance
Life insurance can protect your family from financial loss if you or someone close to you dies prematurely. Why do you need life insurance? Your situation is unique, but most people want to make sure money is available to pay for:
Final expenses – expenses include a last illness, burial expenses, legal fees, accounting fees and appraisal costs (where necessary), death notice costs, and outstanding debts of the deceased.
Dependents – your surviving family will have income needs to maintain their current lifestyle. Life insurance provides an instant estate that can help pay for mortgages, college educations, spouse’s retirement, and other goals and dreams. Also, consider how such a loss could affect your parents; more and more people are helping their parents with care and financial assistance.
Business – if you own a business or have substantial interest in a business, life insurance can help assure that your family or partners won’t be left with large outstanding debts if you pass away prematurely.
How much life insurance do you need? The answer varies with your personal situation, but most financial planners agree that you need to have between five and seven times your annual salary in life insurance.
There are two main choices for life insurance protection, term and permanent (whole) life insurance. When your needs are high and your budget for filling this need is low, term life insurance is an excellent choice. However, term insurance premiums will continue to rise over time, as you get older, with no buildup of cash value or equity.
There are some attractive reasons for choosing permanent life insurance. Among them are:
Guaranteed insurability options for future life insurance purchases
Buildup of cash value and equity
Collateral for borrowing money against cash values
Options to stop making payments in later years.
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