Life insurance offers every consumer a way to take care of loved ones for years to come, even if he or she wont be around to put food on the table. The basic idea of life insurance is that during an insured persons 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. The first, called term life insurance, is bought for a discrete 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 familys 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.
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