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In the event of a disaster or an untimely death, life insurance provides the deceased’s survivors with financial security. If you have any financial dependents, investing in life insurance will prove paramount in providing your loved ones with monetary stability.
The sufficiency of life insurance is entirely dependent upon the individual and their lifestyle. You may need to review your life insurance plan and make changes if you undergo a life change that affects your cost of living or your assets. This could include getting married, having children, or purchasing a house. If you have any dependents, you should seriously consider investing in life insurance. Dependents include any of the following:
If you already have an existing coverage plan, you should regularly review it. Life insurance is designed to cover the cost of living for your dependents, but the cost of living may increase in the cases of marriage, birth, or a career change.
In short, almost everyone can experience immense benefits from life insurance. Securing a stable future for your dependents will help them repay debts and provide them with financial sustenance when you’ve passed.
Many people determine that they no longer need life insurance when they retire. At this point, their cost of living will be supported by Social Security income and retirement savings, which will be deferred to their spouse in the event of their death. If you no longer need outside income and live off of Social Security and retirement savings, you likely don’t need to continue investing in a life insurance plan. Social Security and retirement savings programs will continually provide (albeit lower) funds to your descendants or spouse upon your death.
However, if you still require outside income to support your cost of living, have unpaid debts, or have a financial dependent, you may want to consider continued life insurance. If your spouse would lose a large portion of your pension, you may also want to consider continued purchase of life insurance plans. Additionally, life insurance can help pay off business debts or expenses related to your estate and property. Evaluate the complexities of your individual situation before making a decision.
There are two main branches of life insurance: term insurance and permanent insurance. Evaluating the intricacies of each will help you make a choice that benefits you and your family members.
Term insurance is an ideal plan for growing families operating on a limited budget. This type of policy protects for a designated period and will eventually expire. Term insurance usually offers the best amount of coverage for low initial premiums and ideally covers events such as paying off debts or college education.
Permanent insurance can be broken into two categories. Both offer lifelong coverage and allow members to save money with tax deferments. Both types, however, require much higher premiums.
Whole life permanent insurance is the most basic option and has fixed premiums. These premiums can be allocated in variable life insurance through sub-accounts consisting of stock and bond investments.
Universal life insurance policies offer some fluctuating premium charges and guarantee a minimum death benefit when supported by premium payments. Failure to meet these minimum premiums can cause a reduction in your death benefit amount. Variable universal policies continue to provide adjustable premium amounts and are subject to the minimum functioning account.