Unfortunately, life insurance is one of those things that you know you need. You know it is important and you know that at some point you will have to bite the bullet and get it. What you don’t know, or what no one tells you, is what it is, what type is best for your or anything remotely beneficial.
So, being the wonderful friend that I am, I took one for the team. I delved into the world of life insurance and foraged for all of the information I could. Now, I am here to present to you what I have gathered. My hopes are that this will save you the trouble of several mind numbing hours of learning jargon and such.
I have condensed the bulk of what you will need to know about life insurance into the infographic below. However, I will elaborate on some of the things in the infographic for clarity.
Why you need it
The biggest thing you need to understand about life insurance is that you need it. Obviously, life circumstances dictate what we can and cannot do. However, as soon as life insurance is a possibility for you, it needs to be on the top of your priorities list. The reality of the situation is that when we pass, we leave behind a financial burden, no matter what. How major a burden depends on several factors such as whether you are the sole income earner for your family, the amount of debt you leave behind and funeral costs. While family members do not inherit your debt, when you die, if you possess assets, creditors are entitled to those assets and family gets what is left over. Often, there isn’t anything left over. Either way, you don’t want your death to leave the people you love in a worse position. Life insurance supplements their needs and aids in an already difficult time.
Premiums
The term premium floats around a lot in terms of insurance. Don’t let it throw you. The premium is simply your payment amount.
Cash Value’s Importance
A major deciding factor for some maybe the cash value the policy builds up. This may be important for you if you are in need. In particular, moments you may need to borrow money can be, but are not limited to:
- Needing to buy more coverage to boost the overall death benefit
- If you need immediate cash to pay premiums
- Needing immediate cash for living expenses. Note: If you don’t repay the money, the death benefit is reduced. Also, if you borrow money, the cash value is often used as collateral.
How life events impact
Life insurance depends on your financial needs and often major life events create our financial needs. Considering these events will determine how much life insurance you may need to increase to or decrease to. These are some of the things you should consider.
Marriage- Once you marry, you will leave someone else responsible for funeral expenses and bills.
Buying a house- Your mortgage is dependent upon your income, consider this for when your income is no longer available.
Having kids- Children have reoccurring expenses that need to be accounted for if your income is no longer available.
Getting a new job-You may need to increase your insurance to be compatible with new income.
Also, consider getting a new car or anything else you consider a major change in your life.
I seriously hope this has helped make life insurance less daunting. I encourage you all to begin looking into policies, even if you aren’t in the market right now.
Best of Luck!!