Although many avoid the topic of estate planning or preparations for their demise, it is a subject that must be explored. Life insurance ensures that those who depend on you are able to continue with their lives if you are no longer alive.
Why Is Life Insurance Important?
While not a pleasant topic, life insurance is an important subject that everyone should explore. Who will pay your bills if you were to unexpectedly die? How will your children live? How will your family be able to eat or have shelter, if you, the breadwinner were to meet your demise? It is better to be prepared than it is to wonder and worry. We can’t guarantee that our children will be adults when we die. The best assurance that they will be properly provided for, is life insurance.
Term vs. Whole Life
Many insurance companies offer both Term and Whole Life Insurance. Whole Life insurance is a policy that permanently covers the insured. Whole life insurance acts as a savings policy, if the insured outlives the terms of the policy, they will be paid a cash amount. Term Life insurance covers the insured for a specified term (e.g. 10, 15, 20 years). Once the terms have been satisfied, the policy ends and must be renewed. There is no cash payment at the conclusion of a term life policy.
Is a Term Life Insurance policy Ideal for You?
Term Life insurance policies are ideal for those who are currently ill or require insurance for a short amount of time. The elderly would also benefit from a term policy. Many brokers offer policies without medical exams or background checks. This is an ideal policy for the terminally ill, the under-insured and the elderly. According to Dave Ramsey’s financial education website, you should consider buying the term policy and investing the difference in mutual funds or savings accounts with a larger return.
Important Questions to Ponder
When shopping for life insurance coverage, there are a few things that one must consider before you contact your first insurance agent. It is best to understand your needs and expectations fully, prior to involving anyone. This will prevent you from over-spending on a policy or purchasing a policy that does not add value. Here are a few things to consider:
- How long will you need coverage?
- Do you have any dependents?
- How much coverage do you need?
- How much coverage can you afford?
- Can you really save money with the Whole Life Insurance Policy?
Dave Ramsey The Truth About Life Insurance Retrieved March 14, 2014 from: http://www.daveramsey.com/article/the-truth-about-life-insurance/
Metlife What is Term Life Insurance Retrieved March 17, 2014 from: https://www.metlife.com/individual/insurance/life-insurance/term-life-insurance.html