Insurance

The life insurance industry has been misunderstood when it comes down to the sale of life insurance policies. Folks must appreciate the fact that dying is just a part of life.

There are many things that must be considered before purchasing any life insurance policy. There are 3 main types of life insurance policies to look at Term, Endowment and Whole Life. Let's take a look at these three.

Whole life insurance is designed to cover you for your whole life. When you pay your monthly premiums a portion goes to pay for your life insurance while the rest goes into a savings account. This savings account builds what is known as "cash value" that you can borrow against, if needed, after it builds, but it must be repaid.

These Whole Life Insurance policies "mature" when the insured individual turns 100 years old. At this point, the insurance company will cash out the insured person for "face value" and cancel the policy. Face value is the amount that the policy would have paid in the event of the death of the insured person.

Endowment insurance policies are designed to be paid for a specified amount of time until the policy "matures". Some reasons for Endowment Insurance could be college tuition, retirement, ect. Endowment policies are normally more expensive as they're designed to be paid in full after a certain period of time rather than being paid over the period of the insured person's life.

Term life insurance is the least expensive type of policy that you can buy. These policies can be purchased for a specific time period or "term" just as the Endowment policies, however there is no cash value accrued with term insurance policies.

Term policies are perfect for those that need additional security over a specific time frame. An example would be the breadwinner of the family needing additional insurance coverage during his or her working years when they would have more obligations to meet.

Before buying any life insurance you need to sit down, with your significant other, if you have one, and go through every bill that you have. Separate these bills by figuring out what your regular monthly expenses are for your household and how much you have going out in payments that will eventually be satisfied.
Examples of payments that will eventually be satisfied are car, boat furniture, home, ect. These should be figured into the amount of coverage needed in order to pay these off in the event of the death of the breadwinner.

The other pile will include what your living expenses will be like without those payments. This pile should include homeowner's insurance, life insurance for the surviving family members, food, utilities, clothing, etc.

You'll also need to take into account the loss of income from the breadwinner. This can be tricky, especially if you have children. You'll need to take into account their ages, how many years they have remaining in the home, medical insurance, dental insurance, school expenses, ect.

Finally, you'll need to allow for enough money to survive in the event that you're unable to work or simply need to take a period of "healing" time. The passing of a loved one is never an easy event, but it's made much worse when you're not allowed the time to gather yourself before being thrown back into the routine of life.

The things mentioned above are designed to give you some ideas as to what you need to be taking a look at. Each family and individual has different needs and expenses though and you'll need to take your time when doing your financial inventory.

For more information about the different types of life insurance then you should contact a licensed agent and set up an appointment at your earliest convenience.