Why do I need life insurance? The main purpose of life insurance is to provide cash to your family after you die. The money your dependents will receive (the “death benefit”) is an important financial resource: It can help pay the mortgage, run the household, end ensure that your dependents aren’t burdened with debt. The proceeds from a life insurance policy could mean that they won’t have to sell assets to pay outstanding bills or taxes. What’s more, there is no federal income tax on life insurance benefits.

Where do I Begin? Start by evaluating your family’s needs. Gather all your personal financial information and estimate what your family will need after you’re gone. Include ongoing expenses (such as day care, tuition or retirement) and immediate expenses at the time of death (like medical bills, burial costs, and estate taxes). Your family also may need funds to help them readjust… perhaps to finance a move, or pay expenses while job hunting. Remember, life insurance provides financial protection. If protection is not your primary goal, you should consider other financial products.

How Much Life Insurance To Purchase

How much life insurance will I need to purchase? While there’s no substitute for evaluating needs, one rule of thumb is to buy life insurance equal to five to seven times your annual gross income.

Rough “rules of thumb” suggest an amount of life insurance equal to 6 to 8 times annual earnings. However, many factors should be taken into account in determining a more precise estimate of the amount of life insurance needed. Important factors include income sources (and amounts) other than salary/earnings, whether or not the individual is married and, if so, what is the spouse’s earning capacity, the number of individuals who are financially dependent on the insured, the amount of death benefits payable from Social Security and from an employer-sponsored life insurance plan, whether any special life insurance needs exist (e.g., mortgage repayment, education fund, estate planning need), etc. It is recommended that a person’s insurance advisor be contacted for a precise calculation of how much life insurance is needed.

How much will it cost?

The cost for life insurance varies widely depending on the health and age of the person to be insured and the coverage amount of the policy. Individuals are rated by their age, health history and in some cases, by their careers. All other things being equal, younger people will generally have lower premiums that older people. The best way to find out how much life insurance will cost is to get quotes from multiple carriers.

What about life insurance for a spouse or children?

In certain circumstances, it may be advisable to purchase life insurance on children; generally, however, such purchases should not be made in lieu of purchasing appropriate amounts of life insurance on the family breadwinner(s). It is of utmost importance that the income earning capacity of the primary breadwinner be fully protected, if possible, through the purchase of the required amount of life insurance before contemplating the purchase of life insurance on children or on a non-wage earning spouse. In a dual-earning household, it is important to protect the income earning capacity of both spouses. Life insurance on a non-wage earning spouse is often recommended for the purpose of paying for household services lost at this individual’s death.

Today’s technology has changed the way people are choosing their insurance plans in many different arenas, but life insurance has seen some of the biggest changes of all. There is perhaps no subset of the insurance field where the Internet has had more of a profound influence on what kinds of policies customers are choosing and how much they are paying for them. Today’s agents are playing a less crucial role in how life insurance customers make decisions than they used to, which is a mixed blessing for consumers. Although buying your life insurance online may help you save a lot of money and will allow you to shop at your own pace in your own spare time, making your decision without the guidance and expertise an agent offers can end up costing you or your beneficiaries quite a bit of money.

Agents used to play a very important role in helping customers choose an appropriate policy, but as the business of life insurance becomes increasingly self service, consumers are making choices on their own. The biggest question that most people face about life insurance is how large a policy to take out. A policy that is larger than you need is sure to become an increasingly heavy financial burden during your lifetime; but may not make things better for your family later on as it can end up being decimated by estate taxes before your beneficiaries see any of it.

A policy that is not large enough can leave your loved ones stranded with thousands of dollars of debt due to funeral costs. Ending up with the wrong policy when you buy your life insurance online can have very serious consequences. In order to decide what kind of policy you want to take out, it is a good idea to gather as much information about life insurance as you can. Learn about the different kinds of policies, and about the taxes your beneficiaries will be responsible for, and spend plenty of time taking an honest look at your current budget and how much you can afford to put aside for your monthly insurance payments.

When you do decide on the size of your policy, compare quotes from several different companies to make sure that you are getting the most for your money. The Internet age has made it easy to comparison shop with a minimum of hassle, and there are even sites that will allow you to see how several different vendors would structure your payment plan at one glance. Although buying life insurance online may require a bit more research, planning, and deliberation than purchasing insurance in person from an agent, many people feel the conveniences of shopping for insurance over the web more than outweigh the pitfalls.

There are two primary kinds of life insurance policies, term life insurance and whole life insurance. There is plenty of debate over which type of coverage is better, but many experts feel that different plans are preferable for customers at different times of their lives. Perhaps the major differences between term and whole life insurance are liquidity and price. If you have an inexpensive term life insurance policy instead of a pricey whole life policy, you can use the money you are saving to help you diversify and expand your full financial portfolio. The flexibility of a term plan often makes it ideal for people who are paying off mortgages, have education related debt, or are planning to make a big purchase such as a new car or a large boat.

The price of term insurance is calculated in relation to the age of the policy holder so that a younger customer will tend to have a low monthly payment whereas an older customer may be writing a hefty check each month. This means that, although term insurance is more fiscally attainable for younger people than whole life insurance, term life insurance is usually quite a bit more expensive for older customers than a variable or universal whole life insurance policy. Because whole life insurance takes less of a bite out of older consumer’s checkbooks, people who are not planning on making any large purchases and have paid off most of their debts are often better served by a whole life plan than by a term life plan.

Many people, especially those who have agents to guide them through the process of buying a life insurance policy, will never need to know about the intricacies of how these two forms of life insurance differ. However, there are situations where having a sense of how term life insurance is better than whole life insurance in some ways and worse in some others can be very useful. If you are shopping for a life insurance policy, knowing the ins and outs of when each of these policies is appropriate for a customer can help you determine which kind to choose. If you are re-evaluating how effectively your current policy serves your financial needs, knowing the full spectrum of alternative options will help you gain perspective. If you are the beneficiary of a loved one’s life insurance policy, understanding what kind of policy they have will help you anticipate what you can expect when it is time for you to collect. In any of these cases, a little bit of education about what makes term life insurance different from whole life insurance can go a long way.

In the age of the Internet, comparing quotes for different life insurance policies is easier today than it has ever been. There are numerous websites that allow you to look at the rates for several policies offered by a variety of companies side by side in the comfort of your own home and at your own convenience. The technological breakthroughs of insurance shopping on the worldwide web have led to a rise in the number of customers who are comparing quotes from a wide range of life insurance providers.

When selecting the best policy for their needs, many life insurance shoppers simply choose the option that offers them the lowest quote. Smaller numbers on the life insurance check you write each month mean that you will have more money free to invest or spend than you would if you had opted for a more expensive life insurance policy. However, the least expensive quote isn’t necessarily the one that you should select, as there is more to choosing a life insurance policy than how much you pay. It is also important to consider exactly what your money is buying.

Although rock bottom prices are tempting, higher life insurance quotes may mean a higher level of service for you; more flexibility in how you can use your policy; and less hassle for your policy’s beneficiaries when they try to collect the money you have set aside for them. Often, the lowest life insurance quotes will be from companies that are not highly regarded within the profession or are relatively new and therefore somewhat unstable. Life insurance is meant to protect your loved ones, but not all policies will offer the same level of protection. It is crucial to find a broker who will be responsive to your needs, and to buy your policy from a company that you are certain will deliver when a claim is made. However, in all likelihood, the lowest quote you find will not come with these kinds of guarantees.

Many experts feel it is worthwhile to pay more to have your policy held by an established company that has built up positive word of mouth over a long history of great service. When you compare a variety of life insurance quotes, it is a good idea to spend as much time and effort thinking about these kinds of factors as you spend thinking about money. You may find that even though it may not come attached to the lowest quote in terms of dollars and cents, the trust and security a life insurance policy offered by a reputable company can give you is truly priceless.

Group life insurance rates tend to be substantially lower than the rates for individual policies. Like anything from cans of soup to reams of paper, life insurance is cheaper when you buy it in bulk. There are many reasons why it makes sense for insurance companies to offer lower rates to groups of people than they do to individuals. By doing this, a company can attract lucrative customers like business owners who need to insure their employees. This method of pricing allows insurance companies to expand their businesses while offering the best possible deal to countless entrepreneurs and their employees.

An agent who deals with these kinds of bulk customers can sell many more policies than if each one were an individual sale. An agent making a sale has to give his or her sales pitch, negotiate a contract, go through a series of meetings, and take care of a mountain of paperwork and legal documents. This entire process must be gone through for each individual customer, which can severely limit an agent’s earning potential if the only money the agent sees is a single commission on each of these involved and lengthy policies. By contrast, when handling a business owner or other client who is shopping for a group life insurance policy, the agent needs only go through this series of steps once before collecting a hefty commission based on the number of policies sold.

A broker who makes these kinds of deals will be able to do a higher volume of business, but that is not the only reason why bulk rates on life insurance make economic sense. Even if a company makes a fairly small amount of money on each life insurance policy by selling them at low bulk rates, the insurance company still comes out well ahead in terms of profits given how precious the agent’s time is. Perhaps most importantly, the customer will be able to afford to insure a larger percentage of his or her employees. This means that the low cost of group life insurance makes it possible for more people to become insured, allowing the insurance business to grow while more Americans sleep soundly each night knowing their insurance policies will provide for their loved ones in the future.

Term life insurance is what many people today consider to be the basic life insurance policy. A term policy offers the customer life insurance coverage for a set period of time that can range anywhere from a year to thirty years. During that period, the rate the customer pays remains fixed. Many people find this is the very best way to get the most coverage for their money, as a term policy that lasts for ten or more years can help protect the consumer from the sometimes violent premium fluctuations of the rates charged by insurance companies who are seeing their profits rise and fall as they fight to compete in the global economy.

Term life insurance centers solely on the accumulation of a death benefit. Unlike other forms of life insurance which include investment components above and beyond the amount the customer puts down towards his or her death benefit, term life insurance has no frills or extras tacked on. Term life insurance is in many ways the most basic life insurance there is, because the only thing it does is offer your beneficiaries a bit of protection in the event of your death. Some customers prefer a whole life insurance policy that, through investments, will help them directly increase the wealth they are passing on to their loved ones.  But, most people choose to manage their own estates beyond the basic need for life insurance that offers a death benefit.

Many younger customers opt for term life insurance because its low rates make it an affordable part of a lifestyle with a tight budget. Term life insurance offers a lot of security at a fairly low cost, which makes it possible to take out and pay for a term life insurance policy while also paying off debt or starting a family. For insurance customers who are planning to buy a new home in the near future, or who are facing the demands of education expenses a few years down the line, term life insurance makes a lot of sense because it allows them security and protection without forcing them further into debt.  Term life insurance rates are calculated in part based on the age of the customer, which means that young people who need inexpensive term life insurance policies the most are usually able to get them; whereas older people who are more established in their careers and can therefore afford to pay a bit more for insurance end up paying substantially higher rates than their younger counterparts.

In this post, we’ll cover some basic info about whole life insurance policies as well as trends and if whole life insurance makes sense from an investment standpoint.

Whole life insurance provides customers with a life insurance policy that will help their loved ones in the future, and with an investment component that will help customers and their families right away. This mixture of delayed and instant gratification has been attractive to life insurance shoppers for decades, but today’s trend in life insurance is moving away from whole life insurance packages. Once, whole life insurance policies were the standard, but today they are the exception.

As the economy changes and the American public become increasingly savvy about money management, the full service that a whole life insurance policy provides just isn’t as necessary as it used to be. People who want a more hands on approach to investing are likely to find a whole life insurance policy too limiting.  And, the amount of money that one of these policies requires each month can make it difficult to pursue other investment options, especially for middle and lower class families who are living on a budget.

A lot of financial experts today feel the investment portions of whole life insurance policies do not offer customers the best return rate on their money. This provides an incentive for people to purchase term life insurance policies which do not include any investment components, and then invest their money elsewhere.

However, there are still some advantages to purchasing a whole life insurance policy. Although the investments that an insurance company will make on your behalf may not be the most lucrative, they will almost certainly be among the most stable. Many people prefer a lower rate of return with a lower chance of loss rather than a riskier gamble.  There is plenty to be said in favor of this perspective, especially when it comes to planning for the future. In addition, people who do not have the discipline or inclination to save money on their own often find the structured saving a whole life insurance policy requires to be a boon.

If the idea of budgeting your own savings plans and spending time researching hot stock tips appeals to you, a whole life insurance policy probably won’t be to your personal taste. Of course, even if you don’t opt for this tried and true kind of policy, you can be certain that someone else will. Although today’s trends seem to foretell the end of the whole life insurance policy, there are still enough customers interested in this kind of traditional and conservative policy that insurance companies will be likely to offer this kind of coverage for many years to come.

In today’s post we’ll go over the basics of life insurance, how it works, and the two basic types of life insurance available.

Life insurance offers every consumer a way to take care of their loved ones for years to come in the event of their demise. The basic idea of life insurance is that during an insured person’s lifetime, he or she makes monthly payments to an insurance company.

When the insured person passes away, the beneficiaries of his or her policy, usually immediate family members, make a claim and the insurance company writes them a check for the value of the policy. In many cases, the amount the beneficiaries receive is higher than the amount of money the customer put into the policy.

There are two basic kinds of life insurance (and many variations within each). The first, called term life insurance, is bought for a fixed period of time at a fixed premium. It includes nothing above or beyond a basic death benefit. This is an increasingly popular form of life insurance. The second kind of policy, known as a whole life insurance policy, is a bit more complicated.

A customer contributes to his or her whole life insurance policy on a monthly basis for the duration of his or her life. The premiums fluctuate over time, and tend to follow a gentle upward curve as the customer ages. In addition to including a basic death benefit, whole life insurance includes an investment component that is meant to help the customer grow his or her wealth. This makes whole life insurance substantially more expensive than term life insurance, but many people argue the increased fees are worth it because you get more for your money.

How much life insurance you need has quite a bit to do with how much you can afford to spend on a life insurance premium each month; but it has equally as much to do with how much coverage your family’s lifestyle and situation requires you to have. It is a good idea to try to provide your beneficiaries with a policy that will offer them enough to cover your funeral expenses and to continue to meet their living expenses for as long as possible without facing financial hardships.

There are multiple worksheets available online that can help you make an educated estimate as to how much coverage you should aim for, but it is crucial that you discuss your situation with an experienced and trustworthy professional before you make any firm decisions about what kind of life insurance policy to purchase.