You may have heard about life insurance, but may not fully understand the role it can play in the life of you and your family. Life insurance itself is fairly easy to understand, but there are many questions that people have about its cost, coverage and rules governing its use.
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What follows is a life insurance questionnaire that will answer all the major questions that you have about life insurance. The life insurance questions have been culled from many different sources so that the answers provided will be as complete as possible.
Question: What is Life Insurance and Why Should I Carry It?
Life insurance is a contract between you and the insurance company which stipulates that if you should pass away before the termination of the policy, the company will pay the agreed monetary benefits to the person you have selected as a beneficiary. In essence, a life insurance policy is one where you pay monthly premiums in order for the stated benefits to be available to your designated beneficiary in case something should happen to you.
Life insurance policies can be worth from a few thousand dollars to a million dollars or more depending on the terms. The beneficiary is the one who will receive the money in case something happens to the person that is paying on the policy.
There are two basic types of life insurance policies, whole and term. Whole life insurance has no time limit and a common features is that you actually earn interest on the policy which acts as sort of a long term savings account which may be cashed out if you desire. A term life insurance policy is generally less expensive, but has a finite date in which the policy will end which is generally from 5 to 30 years.
The primary reason people carry life insurance policies is so that their death does not place a financial burden on their family. This is especially true for the main breadwinner who may be paying most, if not all the expenses. The benefits from the policy is designed to pay the immediate funeral costs and other debts, bills and expenses until the rest of the family can stand on their own.
However, there are other reasons why people carry life insurance as well. The benefits can be such where they offer a nest egg for a person to go to college or even properly retire depending on the circumstances. In addition, for those who run a business the life insurance policy can be used to help stabilize the company in case the owner passes away.
Question: Why Do I Need Life Insurance?
There are many reasons why you might need life insurance. First and foremost, it offers ample financial protection for your family in case you should pass away. You can tailor the policy so that it carries enough benefits to cover your funeral expenses up to creating a nest egg that your spouse and family can live upon for years to come.
The protection that a life insurance policy provides is a powerful one because the benefits can greatly outweigh the premiums that are placed into the policy itself. In other words, the same amount of money that you pay in premiums that was instead put into savings would only be a fraction of the total amount of money that your family would receive if you should pass away.
Life insurance that reaps growing interests is also an important consideration since you can cash out the policy at a certain point and earn more than your premiums alone would deliver. However, term policies have their advantages as well since they are generally less expensive and offer a means to cover a vulnerable period in your life where if you should pass away, it would not take away your life savings or place an undue burden on your family.
Something to note is that the beneficiary receives the money from the policy and no one else. This means that the beneficiary can do what they want with the money available which is an important consideration when debts are to be paid.
Even people who are well off and have other resources available choose a life insurance policy because the added benefits help protect their estate and can be used to pay off debts or deal with expenses that would not tax the other resources that are present. In essence, whether you are very well off or just getting by, having a life insurance policy is virtually mandatory for the financial protection of those you love.
Question: How Much Life Insurance Do I Need?
The amount of life insurance needed will be based on the current state of your financial affairs. This means that you will need to take into accountant your contributions to the family in terms of paying the bills, saving for college and retirement for your spouse.
For those who have very limited budgets, a life insurance policy that just covers funeral expenses and any outstanding debts will generally be inexpensive because the benefits are relatively low. However, keep in mind that there may be health or lifestyle factors that play into your life insurance premiums such as smoking or medical history. Still, the larger the benefit the greater the monthly premiums will be.
If you are in a state of transition, such as saving up for your children’s college fund or putting money away for retirement, then you will need a good nest egg in terms of benefits so that you can provide for college or retirement. This will mean a larger policy in terms of benefits is required.
A person who runs a business will basically need greater coverage as the benefits will be used to help shore up the company during this time of transition. Therefore, they will generally need more coverage in order to keep the business afloat depending on the assets, debts and overall arrangements that have been made as to the future of the company.
People who are financially well off may not seemingly need life insurance, but the truth is that the sudden financial shock of their passing will place at least some burdens on the family. Having a life insurance policy in place that covers funeral expenses and any outstanding debts can leave the estate intact while allowing family members to still be supported financially during this trying time.
No two people are alike in terms of their financial needs. Therefore you will need to assess your own personal financial state of affairs to determine what type of life insurance policy will best benefit your needs.
Question: Where I Can Find Life Insurance Over 60?
Well, if you are over 60 you must not delay any more before getting a life policy. Remember that, premium increases one becomes older. Some people are worried about having an affordable at this stage due to uncertainly in their mind. Here read all you need to know about life insurance for seniors over 60.