Lee Da Silva’s Insurance Blog

Is life insurance for me? Why should I buy life insurance and how much coverage do I need? While most financial plans are based upon our current or future needs and wants, life insurance looks beyond our lifetimes to the lives of the ones who will have to struggle on without us when we die. For this reason, some people are reluctant to buy life insurance, as if thinking about death—let alone planning for it—could make if occur instantly.

When you buy a life insurance policy, you pay the life insurance company a monthly premium, the cost of owning the insurance. Depending on how much coverage you want and need, premiums are usually very reasonable, perhaps about the cost of a couple of cups of coffee per day.

While you are living, you designate one or more people called beneficiaries. This person or persons will receive the value of the policy after you die. If you prefer, the beneficiary doesn’t even have to be a person. It can be a charity, school, church, company, or any other organization you would like to receive the money.

If you’re still wondering, is life insurance for me, you need to realize that you do have some choices. You can purchase term life insurance. If you have term life insurance you pay a premium, and receive coverage, for only a certain period, a term. You pay a monthly premium either for the entirety of the term or until you die.

Premiums on term life insurance typically increase as you grow older and your health risks increase. Your benefits, however, do not decrease. If you die at any time during the term, your beneficiary gets the money. If you do not die during the term, however, the policy ends and you will either have to seek new life insurance or go without.

Whole term life insurance is another choice. With whole term life insurance, you pay a fixed premium every month for the rest of your life. The cash value your beneficiaries receive may actually grow as the cash accrues interest each year.

Beneficiaries may use life insurance for a number of things. One of the most popular uses is to pay for the cost of the funeral. Even a simple funeral can cost more than $10,000 these days, so if your plan is worth, say, $30,000, up to a third of the money left to your beneficiaries will go to cover the costs of your final expenses. You should be aware that most life insurance companies will not pay your beneficiaries if your commit suicide.

Beneficiaries, especially if the beneficiary is a spouse raising young children, also use the money for daily living expenses, such as groceries, clothing, food, etc. If the beneficiary is your spouse, he or she might also set up a college fund for your children or a retirement fund for him or herself.

Finally, some beneficiaries use the money a little more extravagantly, to take that vacation they’ve always wanted, perhaps, or redecorate the house. But you wouldn’t begrudge your loved ones a little joy, would you?

This article has offered several good reasons to purchase life insurance, answering the question, is life insurance right for me? Now it’s time to talk to your financial planner and get the life insurance coverage you need in place.