(ThyBlackMan.com) Think of life insurance as an investment in your family. You will be able to provide for them even if something unexpected happens to you. Your family will continue to thrive even when you are no longer around to take care of them. As sad a thought as this may be, it’s better to be prepared. When choosing a life insurance plan you secure the well-being of your family even after your passing. This is a concern that we all have, after all, we want our family to keep moving forward.
Learning about life insurance can make a world of difference to your family. When you are no longer here, your family will still receive the money they need to survive. They will be able to pay their daily living expenses. The will be able to maintain their current lifestyle. Without life insurance, you are leaving them to fend for themselves.
In essence, a life insurance policy is a contractual agreement with an insurance company. In the contract, the insurer promises to provide for your family if you die. They will pay an agreed sum to the people you list as your beneficiaries. In return, you must pay the insurer a premium. A premium is a periodic payment.
The amount of your premium payments depends on many factors. Here, for example, are some of the factors that go into calculating your premium:
- Your age.
- Your gender.
- Your medical history.
- How much life insurance you buy.
Matt Schmidt of Diabetes Life Solutions notes ” many people make the mistake of not applying for life insurance while being younger and healthier. As we get older, there’s a pretty good chance most of us will develop some type of medical condition such as Diabetes. Life insurance with Diabetes will almost always be more expensive compared to taking out a policy before you contract this disease. Never wait to lock in a life insurance policy as you’ll ultimately save money on premiums.
If you die, your family will receive money to take care of their needs. They will receive money to make up for your lost wages. They will receive money to fund your children’s education. They will receive money to pay off living expenses. And they will receive money to pay for your funeral, as well as related costs.
Life Insurance Categories
There are two forms of life insurance. One is Permanent Life Insurance. The other is Term Life Insurance.
Permanent Life Insurance
Permanent Life Insurance can pay out while you are still alive. It builds cash value. As long as you continue to pay your premiums, this type of insurance will not expire.
Term Life Insurance
Term Life Insurance will protect your family for a certain amount of time. A term can range from one to twenty years. Your family will receive benefits should you die at any time during the term. But, it will not receive payments if you do not pay your premiums. The insurance stops as soon as you stop paying. Unlike Permanent Life Insurance, you don’t build up cash value.
How Much Life Insurance Should You Buy?
The goal of life insurance is to take care of your beneficiaries. Upon your death, the insurance company will compensate for the loss of your income. You may need or more policies to meet this goal.
The best way to choose the right life insurance policy is to talk to a life insurance company. They will help you make the best decisions based on your current circumstances.
There are two ways to calculate how much life insurance you need.
The first way is to calculate how much replacement income your family will need. This is the most popular method of determining how much insurance you need.
The calculations factor the following factors:
- How much you are making now until the time when you retire.
- Your current salary.
- Your current benefits.
- Your current health insurance.
- Your 401 (k) or other form of retirement savings.
- The personal services you provide for your family.
- How much you spend each year to maintain your current lifestyle.
The second way is to calculate how much your family needs to survive. Survival is not just food, shelter, and basic needs. It is your family’s current lifestyle. The calculations are based on you family’s current assets and income.
Since life is unpredictable, life insurance can help you plan ahead. It can help you take care of your family when you are no longer here.
Staff Writer; Brad T. Moore