February 27, 2013
Life insurance is one of the most critical types of insurance that one can have yet many of us overlook it, don’t understand it, or have inadequate life insurance coverage. Generally speaking, insurance helps us prepare for unforeseen and sometimes sudden and tragic events.
However, in the case of life insurance, the event is death, although certain, it is unknown when one will die and under what circumstances.
The main purpose of life insurance is to establish a financial scenario so funds available for various expenses directly related to one’s death such as burial but more importantly to take care of ongoing financial obligations. Financial obligations may be for the mortgage on a home for the surviving spouse, college tuition for children, and other substantial monetary burdens. In summary, life insurance is protection against financial burdens after the death of the insured.
The beneficiary of a life insurance policy is usually one’s family. The insurance company promises to pay the beneficiary a specific amount of money when one dies as long as the policy premiums have been paid up to date and in compliance with the policy.
The insurance death benefits may be used for such things as:
to replace income that is necessary for the family to maintain their standard of living after the death of the insured wage earner,
to pay off a mortgage loan,
to pay of personal or business debts,
to create a child’s education fund,
to pay funeral costs, taxes, and other related final expenses, and
to establish an emergency fund or a special needs fund for a family member
One of the first questions that one must ask is how much life insurance is needed. One must evaluate loans, mortgage, rent, and other debts and decide the amount necessary or adequate to take care of these and allow the family to maintain their standard of living. Other debts to consider are car loans, personal loans, and credit card balances. Another factor is how much annual income the family will require each year to make up for the loss of wages. It is important to be as detailed and realistic as possible. Consultation with a life insurance agent is recommended to determine how much life insurance is the proper amount.
After determining the proper amount of insurance that is required, then one must analyze the different types of insurance options. There is term life, whole life, universal life, variable universal life insurance, and other life insurance products. Because there are so many different types of life insurance products it is highly recommended that you consult with a life insurance agent. Dave Terpening Insurance, Inc. has agents that are very experienced in helping assess the life insurance needs of clients and recommending the best solution. The sooner you are covered with life insurance the sooner you and your family will feel at ease knowing that in case of death that there will not be financial hardship. Call us at 1-800-585-1776 for assistance with your life insurance requirements.