What Type of Life Insurance Do I Need?


Question:- What Type of Life Insurance Do I Need?

Answer:- LIMRA, an international consulting and research institution for financial and insurance industry, reports that as on 2010, nearly eleven million US families with children below eighteen years of age did not have any insurance coverage! On the whole, less than fifty percent US families had personal life insurance, meaning that in the event of the breadwinner dying prematurely, the dependents had no way to paying their  bills and would virtually be pushed to poverty.

That thought should prompt many to opt for life insurance cover but the variety of insurance products is so large that one is often unable to decide what type of life insurance do I need?

A majority of people would start considering having a life insurance cover on getting married and starting a family, though in fact, it is a lot more beneficial to buy life insurance policy at a younger age. This fact is highlighted by USAA Life Insurance, reporting that there is an increase in the number of singles buying life insurance covers, though the overall sales have dropped.

Unmarried young adults require sufficient funds for paying their end-of-life expenses, lest their parents should be required to clear their debts. Unmarried policyholders, providing financial or care support to their parents would also like their policies to fulfill that requirement. A very important and helpful feature of buying policy at younger age is low payable premium. Nonetheless, the older policyholders may like having a life insurance policy for supporting their surviving partner or as an inheritance for their children.

Irrespective of your age, the primary step while buying life insurance is to define your requirements. There are many websites providing guidance on the subject what type of life insurance do I need? or you may discuss it with your insurance agent. Though the most important factor is your yearly salary, many other factors come into play. You present expenses including rent, mortgage and tuition fees, if any, need to be factored in. The other factors coming into play are urgent expenses like medical bills or burial expenses and the funds you would need in case you decided to change your job.

Well, if your spouse is not working, you have to take into account the expenses likely to be incurred for getting a substitute for doing all the jobs in his or her absence. They may be doing cooking and other household jobs. One also needs to take into account the expense of having a stay at home parent. All these factors need consideration for deciding what type of life insurance do I need?

It’s not unusual for people to underestimate their requirements. A non-profit organization that educates people on insurance and financial planning adds that in the present market, consumers need to invest more capital to get the same amount of interest than what they were required to do couple of years ago.

As already said, life insurance products come in large range. Once you have assessed your requirements you can seek help of an insurance agent for getting an appropriate policy. However, you should know that term life insurance provides you cover for a chosen number of years, but a permanent life insurance remains valid as long as you keep paying premiums. Permanent life insurance is also known as cash value insurance as it also generates accumulated savings with tax deferred benefits. Whole life, universal life and variable life are all different types of permanent life insurance.

Understanding term insurance is quite simple. It’s akin to paying rent, so when you don’t pay rent, you lose coverage. That is one reason that young people buy such policies. But a thorough understanding of whole life insurance necessitates the need of an agent.


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