What is life insurance and why do I need it


You’ve heard about life insurance, but you aren’t sure why you need it or what it does? That’s okay, because you aren’t alone! Life insurance policies are complicated and confusing even to those who work in the insurance industry, but don’t worry! We’re here to help with this comprehensive guide to life insurance, including how it works and why it can be crucial to your financial future.

What is life insurance?
Simply put, life insurance is a way to ensure that your loved ones will have money if you die. It’s like an investment: You pay a company money in exchange for coverage; that company agrees to pay out a lump sum if you die. It’s essentially an agreement between you and an insurer, so there are many different types of policies with different amounts of coverage options (including burial costs) based on your needs. Don’t buy one blindly—always ask plenty of questions before signing up! How does it work?: How much life insurance you get really depends on your personal situation. Are you single or married? Do you have kids or pets who would be financially impacted by your death? Are you responsible for paying off debts (like student loans)? Do other people rely on your income? If any of these are true, then get enough coverage to cover what would happen if something were to happen to you. This might mean thinking about how much it would cost to replace whatever job(s) depend upon your income, funeral expenses or even how long surviving family members could go without getting paid/staying alive (pets/children/etc.). A good rule of thumb here is typically 10 times annual salary per person for every million dollars in debt being covered.

Types of Life Insurance
Before we dive into what it means to need life insurance, let’s take a look at some of its most common forms. There are four main types of life insurance policies: term, whole, universal and variable. Term: The simplest type of policy, term covers you for a fixed amount of time—typically 10, 20 or 30 years—at a fixed premium that never changes. Once your coverage expires you can opt to renew or find another carrier. This flexibility makes them great for general financial protection but their limits mean they won’t help you replace income that you depend on; thus they’re usually not appropriate as your only source of protection. Whole: Whole (or permanent) insurance pays out when death occurs.

How Much Do You Need?
There are many types of life insurance policies available, but most are designed to take care of your loved ones financially in case something happens to you. People buy term and permanent life insurance for different reasons. Here’s what you need to know: Term: If your goal is simply to protect your family financially, term might be a good fit for you. Term allows you to build coverage over time while paying premiums that are less expensive than permanent policies because they’re locked in for a certain period (usually 10, 20 or 30 years). Once that period expires, your coverage will expire as well; however, term can be renewed if there’s still a need for protection.

When Should You Get Life Insurance?
There are many reasons to get life insurance. If you have young children, you may want to consider getting a policy as soon as possible in order to ensure they’re taken care of should something happen to you. Parents with grown children may also consider purchasing a policy later in life so that their kids won’t have to struggle financially should they pass before their children become adults. Other people purchase policies in case they become disabled, or if they accumulate a lot of debt during their lifetime.

Finding a Good Provider
Life insurance can be a confusing, expensive product—especially if you’re young. If you don’t have much money to spend, finding an affordable policy can seem impossible. On top of that, some companies target consumers who they know have bad credit or less-than-ideal situations. While these policies may seem like a good deal on paper, they come with hidden fees that could end up costing you more in the long run—and even get you turned down when applying for other types of financial products like loans or mortgages.

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