Making the Case for Life Insurance

No one really wants to think about the time of their demise, but one thing is certain. No one gets out of life alive. Therefore, those who have a family should prepare for this eventuality and take out a life insurance policy that can take care of their families after they are gone.


The type of insurance that you might want to buy depends upon your station in life. If you're a single with no dependents, it makes no sense to pay the premiums to take out a $1 million policy when a smaller $25,000 policy will pay for your final expenses. If, on the other hand, you have a family that counts on your ability to provide an income, the peace of mind that can come from a policy that pays out many times more than your annual income can be a good investment to make.

There are two major types of policies that you can buy: term and whole life. Term policies tend to have a stable premium for the term of the policy, which will usually range between 10 and 30 years. Term insurance will usually have a lower monthly premium and buy more coverage. There is only a death benefit with term policies, but in certain instances, those who are insured can draw on the policy if they are diagnosed with a terminal illness. Because of the higher payout and the lower premiums, term policies will be more beneficial for most people. However, it's important to remember that health issues that arise during the term of a policy could keep you from getting approved for a later term policy.

You can also buy a whole life, sometimes known as a cash value, policy. This type of insurance also has a level premium, but it lasts until the point of death. This could be one day or 70 years into the future. The death benefit will be lower in the earlier days that the policy is in effect, but payments over and above the cost of the actual insurance will be invested to build up a cash value over time. This can be drawn out for additional retirement funds, go toward a bigger inheritance or donation upon death or be borrowed against for certain expenses during life. The amount of insurance that you can buy for each premium dollar is going to be lower with whole life.

Regardless of the type and amount of insurance that you decide to go with, unless you have millions in the bank, you should probably take out a policy. It can go toward paying for your funeral or other final expenses and take these burdens off of your family, or it can go toward replacing your income and provide financial stability for your family.

Here's a helpful resource with more information on life insurance, including a list of the best providers to work with.

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--by Beth Heikkinen
Marquette, Michigan
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