We all need life insurance. Even if we do not have much in the way of personal expenses, life insurance is a must. Parents will even obtain life insurance on their newborn babies because we never know what is going to happen from day to day. Newborn babies do not have debt, but there are funeral expenses that the parents have to worry about if the worst happens. If you are an adult without life insurance, that is as good a reason as any to have coverage.
But if you are not sure how life insurance works, that is okay. Many individuals refrain from even getting involved with looking for life insurance for the fact that thy lack the awareness needed to find it.
Fortunately, that all ends right now
The different policies
The first place that people tend to get confused is that they are not sure which policy type is best for them. Well, here is a breakdown of what you may want to consider and when you may want to consider it.
If you are a young individual, such as someone who is in college or just establishing your life, you may want to look into a Term policy. This is because Term life insurance policies are the most affordable and they offer a significant amount of coverage. You can get over 100,000 dollars in coverage for 20 dollars or less if you need to.
If you are a young individual or middle aged individual who can afford a higher premium than what you would have to pay with Term, it is a good idea to look into Whole life. You want to get this policy young because your health is in the best condition. The premium you get now is the premium you will pay for the rest of your life. But even if you are not young, you still want this type of policy because it gains cash value in the form of an annual dividend. Eventually, you can borrow from the policy if you need to.
Universal life is a combination of Term and Whole. This is because you can make changes during the life of the policy that you can make on Term but not Whole, while keeping the policy for the duration of your life. If you cannot afford a higher premium when you are young, you can increase your coverage when you are older and pay the higher premium. That is one example of what you can do. This policy still gains cash value.
So now you know the different types. Now what does life insurance do after you have it?
How it works
How life insurance works is quite simple. You have to inform your family of the policy so that they can contact the insurance company and prove your death so that they will pay your beneficiaries. Your beneficiaries then take the money to settle any outstanding debt, pay funeral costs, and pay burial costs. You may even want to provide enough to where your spouse can be financially secure for a while so that he or she can get on their feet on their own.
It is as simple as that. This keeps your family from having to liquidate assets or take a smaller inheritance after you die. In other words, they do not have to deal with financial shell shock when you have an adequate life insurance policy.
Jane Reynolds works for life-insurance-settlement.com; a company dedicated to making it easier for you to find quality life insurance in your state. Life-insurance-settlement.com is a directory of life insurance websites and makes looking for life insurance a one stop affair.