Probably most of us understand how this whole life insurance idea works: you think in advance and pay regularly, so as to provide financial help for your family after your death. We also usually realize that it is worthwhile, since nobody has the ability to predict what can happen tomorrow. But there is yet another point in the topic which we should be aware of: we all need the right insurance products for our individual situations. And this is not so well-known and easy. This article will help you decide on the best life insurance option for you.

The essentials you need to know

Basic protection – if you would like to take care of your remaining family’s finances in case you suddenly die, think about term insurance. This provides coverage for a certain period of time and at a lower cost than it is in the case of other insurance types.

Market participation and cash value – choose permanent life insurance when you have more money to spend, you look for long term insurance protection and would like to have potential to build cash value (so that you can borrow money even during your lifetime). There are three types of permanent life insurances:

  • Whole life insurance – here you build value which is based on a set schedule. Every year you can check your current cash value. If you take out money from your policy, the cash value and death benefit decrease.
  • Universal life insurance – here you earn a fixed interest rate on your cash value. With the passing of time, the interest rate can change, but it cannot drop lower than a guaranteed minimum.
  • Variable universal life insurance – in this option you are allowed to invest your cash value in the stock market. In this way, your policy value depends on your investments. In such policies the investment subaccount options are not sold for the general public.

How long do you need?

If you need life insurance for a certain amount of time (because you pay of your mortgage etc.), choose term insurance which is aimed at protecting you for a specific period of time.

Any fees?

This issue should be discussed with your agent in advance. Ask about any fees or charges before you make a decision.

Can I withdraw money?

Whole, universal and variable universal insurances usually give you the option of taking a loan or withdrawal. However, the conditions vary between companies so you need to find out what it looks like in the firm you have chosen.

Can payments be flexible?

Universal and variable universal products sometimes offer flexible payments option if you have already paid enough money to cover the charges of your policy.

Contact your local agent and ask about all you need to know. Choosing the right life insurance is very important for your budget and feeling of security. Check numerous options, companies and ask about smallest details. Remember that your life situation may change, as the market changes and your life insurance will probably need changes too.

The sad truth is that people die, and usually death comes unplanned and unexpected. If there is someone who will suffer after your death, it is definitely a good idea to take care of proper life insurance to provide funds for your family. This so called “death benefit” comes with financial help in case you died and provides money for expenses such as funeral, daily life, college. Life insurance benefits are not taxable.

If you are still not convinced, here are more arguments.

Married people without kids need it

If you think that you do not need insurance because you do not have kids, you are wrong. Living on two salaries is sometimes difficult, what would happened if you suddenly died? What about loans, mortgages, bills and other expenses? Would it be possible to pay everything off with only one salary?

Married people with kids need it

If you do not want to leave your family with huge debt and many unfulfilled dreams and plans, you should definitely think in advance. No one knows what can happen tomorrow so it is highly recommendable to have life insurance to provide for your family’s financial security.

Single parents need it

Being a single parent entails large responsibility. Many single parents do not think about life insurance even if they know that they are the only person who provides for their child. What happens if they suddenly die? It seems obvious that good life insurance is just necessary in such cases.

Stay-at-home parents need it

Not only money counts. Stay-at-home parents are very often underestimated, but in fact, their contribution to the household’s finances is huge even if it does not mean “making money”. Life insurance is a perfect solution for families who need to feel financially secure.

Parents of adult children need it

You have been working for all the best for your family throughout your whole life, and now when you know that loans and mortgages are paid off, children are already self-reliant and you have all you need to have, you start thinking: what for do I need life insurance now? Actually, there is still such a need. If you suddenly died, your spouse may need financial help so as to maintain the present quality of life you have worked for so hard.

Retired people need it

Think about your heirs. Do you know that estate tax payment can be as high as 45% (depending on the size of your estate). As life insurance is paid immediately, it will provide all necessary funds.

Small business owners need it

How can life insurance help your business in case you died? It can fund a buy-sell arrangement, thereby, the remaining owners have money to buy your company’s interests – the owners receive the business, the family receive money. You can buy a key person insurance if your want to provide the other owners with financial flexibility to employ a replacement or find other solution.

Some single people need it

If you are single, but you help your parents or siblings you may need to think of life insurance. Besides, if you have some debt and you do not want them to pay it off after your death, you need to provide funds for this purpose.