exactly is Life Insurance?
Life insurance offers a way to replace the loss of income
that occurs when someone dies, normally the person responsible
for providing the majority of income for the family. It
is a contract between you the insured and the insurance
provider that has issued the insurance. If you die while
the insurance policy is in force, the insurance provider
pays the face amount of the contract free of income tax
to the person or persons you name as beneficiaries.
Let's take a look at
what a good life insurance program covers. It must do more
than just replace the loss of income that occurs when the
bread winner dies. It also needs to provide money to cover
the many extra costs that arise from your death. Such things
as funeral expenses, probate, taxes, child care and many
other expenses. There should also be enough funds to provide
for your family's future needs as well, including college
education for your children, housing expenses, transportation
There are types of life insurance that build a cash value
(permanent insurance). With this type of insurance you can
borrow against the cash value or surrender the policy outright
for the cash value. This feature should be considered as
a secondary purpose if you choose this type of life insurance,
the primary purpose of all life insurance should be the
financial protection of your loved ones.
Do you need Life Insurance?
The question You might ask yourself is would my family suffer
financial hardship if you were to die? Would your spouse
be able to support themselves and any children you might
have? Families with small children have a definite need
for life insurance. If both spouses work you probably need
life insurance on both of you. Even if only one spouse works,
the need for insurance on the nonworking spouse can be important
too. There will be the need to hire someone to take care
of the children if they were to die as well.
What would happen to your family if you
were not properly covered?
Anytime we lose a loved one it can be traumatic. But, if
you have left them without proper life insurance to meet
their basic needs, or to make their future plans, dreams,
and goals possible it can be devastating. They will need
time to get back on their feet emotionally as well as financially.
They could be forced to go into debt just to meet the daily
needs. All of these things should be taken into consideration
when thinking about purchasing life insurance.
We suggest you talk to a licensed life insurance agent or
broker to help you find a plan that is right for you.
Term life insurance
Whole life insurance
Universal life insurance