A local insurance agent used to have a sign on the wall. It states that no widow ever complained that her husband had too much life insurance. If a family provider dies it can leave survivors with a bigger problem unless they have enough savings to replace the lost income. In addition to losing that person, they may struggle to live well afterward.

Replace Lost Income

So this brings us to the first benefit of life insurance. It is used to replace the earnings that were lost after the death of a person. When people sit down to find out how big a policy they should buy, they usually try to estimate how much of their income will be lost. They try to find out what resources or assets they have to replace that money. Then, ideally, they choose a death benefit that can fill that gap.

If the premium for that amount of coverage is too high for their budget, they may buy less. At least the survivors will have some money to help them adjust to their new lives.

Pass on an Estate

Insurance benefits are usually not taxed. Also, you can buy death benefits much higher than the actual premium that you will have to pay. So a policy is a way of creating an asset. It could be for a spouse or children. In some cases, this may be for a preferred charity.

Avoid Disputes

Here is a common use of a life policy. Consider an example where a person has an auto repair garage. Let one of his sons be trained and prepared to take over the business after the death of his father. This man also has two daughters who have decided to become teachers, and they want nothing to do with working in an auto garage.

In this case, the father can leave the business to his son, and he can compensate his daughters with the proceeds from the policy. It can also be used to buy out a family if two partners run the business, and one of them dies.

Build an Asset

Permanent life insurance policies, or those that can be converted into permanent policies, can have another use. Over time they can increase the cash value. This cash account can be used as a source of funds. It can be borrowed or redeemed. In some cases, you can find investors who will buy the policy for a percentage of the face value. This is called a life settlement. So sometimes, a policy can be used to help build a cash asset that can be used while the insured is alive.

Terminal Illness

Some policies also have an accelerated death benefit. This means that the insurer will pay all, or part of, the death benefit in case the person has a terminal illness. Some have riders who will also pay for other things like nursing home care. This means that the insured can actually receive some benefits from their policy while they are still alive and need money for care.

Learn More About Life Insurance

The right policy for you will depend on your budget, plans, and needs. It might help to get some quotes so you can compare policies. It will also be helpful to consult with a qualified insurance agent to make sure you understand your options.

Best Tips For Life Insurance

If you go for an insurance package this year, life insurance is probably one of the most important ones. Securing your family’s financial future along with building your wealth should be at the forefront of everyone’s mind, which is why life insurance is an important investment when something unexpected goes wrong. Sourcing the life insurance package that suits you can be quick and easy as long as you keep the following points in mind.

While looking for life cover it is important that your policy has adequate cover. When setting up your policy it is important that you be 100% honest about your debts and take the time to really consider whether there is financial support to pass on the repayment duties to your spouse or children in the event of your death. Overheads need to be covered. If you have children, you can also set aside money to see them through school and university.

As a couple, you may be used to applying for credit cards and mortgages under two names. If you are a husband and wife looking for life insurance, taking a joint policy is not always the best approach. Instead, look at how two single-life policies would be a good fit for you. Usually, a joint life insurance package includes only one payout when the first person under the policy dies. Organizing two single policies will give your family and children two separate payouts which can be extremely useful in a tough time.

Remember to be honest with your insurer when reporting health problems or past illnesses. Failing to mention health conditions to your insurance provider may result in non-payment of your life insurance policy because you have failed to disclose important information. Given that habits such as smoking can greatly increase the cost of your monthly insurance premium, some people consider it wise to save in the short term and fail to inform their insurers about their habits. If it comes to light or you die of a smoking-related illness then your policy can get changed under non-disclosure and your family will not receive any policy.

Lastly, don’t forget to shop around while looking for your life insurance policy. The growth and rise of price comparison websites mean that getting life insurance quotes based on your individual circumstances has never been easier or faster. It is also worth reviewing your policy and the benefits associated with it, noting that the premiums and your own personal situation may well have changed.

Tips to Choose Life Insurance

While many of us need auto, home, and health insurance, can we live without life insurance? Most of us plan to live to a ripe old age, so securing our lives financially now may seem unnecessary. But even if you want to stay fit and stay safe, keep in mind that “stuff” happens in life. So it pays to prepare for the possibility of your death. Here are some tips to find the right life insurance policy at the right price:

Get the Right Amount of Coverage

This is extremely important while taking a life insurance policy. While getting too much coverage can be futile, you definitely want to avoid not getting enough! To calculate how much you need, consider how many beneficiaries you’ll have in case of death, and how long they’ll need to be covered. The average coverage period is two years, although you may want to cover your family for a longer period of time. And when calculating how much coverage they’ll need, subtract income earned from salaries and investments from total small and large expenses. Food and clothing are some examples of small expenses, while mortgage and car payments are some examples of large expenses.

Keep in Mind the True Function

The bottom line is that by using this type of policy, the sum assured will provide protection for the lost income. However, there may be some situations when a life insurance policy is unnecessary. If you are wealthy, your family may not need the additional income after your death. Also, if you are unmarried and have no dependents, you may question the benefits of such investments. Whole life insurance is helpful for many people, but it is not necessary for everyone.

Remember that All Policies are Not the Same

Apart from the amount and duration of coverage, it is also important to get the right type of insurance. Here are some of the most common types:

Term Life Insurance: This is the easiest type of cover on offer. The payment of a fixed premium provides cover of a fixed amount for a specified period of time. In the long term, this is the most economical option.

Universal Life Insurance: This type of policy allows you to make adjustments in your premium and death benefit. The premium you pay is invested in the cash value of the policy. This amount increases over time, and you can redeem it before your death.

Whole life insurance: This includes some major drawbacks including high premiums.

Shop Around

As with any other type of insurance, it is important that you shop around before taking any insurance policy. Look online and offline to give you the best chance of finding the best deal. It’s more convenient to search online, yet you can find some solid policies offline. Also, when comparing and contrasting prices, be sure to compare apples to apples and oranges to oranges. For example, some policies may include an option whereby monthly premiums are covered if you become sick or lose your job while working. Others may allow you to cover yourself for critical illness or death, whichever is earlier.