Life Insurance

Life insurance is not a topic that most people want to consider. However, getting adequate coverage provides surviving family members with the means to take care of themselves. Getting adequate insurance should not be merely an option for you, it must be a priority.

The rule of thumb is that only the people who are responsible for the primary income need to be insured. In theory, that makes sense. In reality, there are costs such as funeral expenses associated with every person. It makes sense for each person to get at least enough insurance to cover burial expenses. At minimum, the primary wage earners should be insured.

Selecting the right amount of insurance depends on your salary, number of dependents, current lifestyle and debts. According to insurance experts, you should have a policy that covers five to ten times your annual income.

One of the most confusing aspects of life insurance are the types of insurance. There are basically four types of insurance policies.

1. Term insurance policy offers coverage to individuals for a specific time period. The majority of term insurance policies provide coverage from 10 to 30 years. If the insured person lives past the term, there is no cash benefit to the policy.

2. Whole insurance is in effect until the death of the insured. In addition, it accumulates a cash value.

3. Universal insurance contains a mixture of features of both whole and term insurance. Any excess premiums that are paid are credited as a cash value in the policy.

4. Variable insurance enables the insured to build up a cash value by serving as an investment vehicle. The growth of this insurance is dependent upon the stock market. This insurance yields values that may fall as quickly as they rise.

The cost of insurance varies depending upon the age of the insured and the type of insurance. Term insurance tends to be the least expensive.

Cost should not be the only factor when selecting an insurance policy. A good insurance policy can protect your family and budget.