subject: How Can You Learn If You Need Life Insurance? [print this page] Life insurance is not for everyone. How do you know if you should own some? If you have someone in your life that depends upon your income, then you should have life insurance to protect that loved one. For example, if you operate a fishing boat and are the primary income earner for your wife and two children, then life insurance should be an important component of your financial plan for protecting your family. Comparison shopping for life insurance is made easy with free quote services which are available over the internet. People in higher risk jobs should definitely consider owning life insurance to protect their family in the event of an unforeseen accident which could take your life and prevent your family from paying the bills.
There are several types of life insurance and it can be confusing. However, the most popular and most basic form is called term life insurance. This is also the most affordable. Term life insurance provides protection for up to thirty years which is plenty of time for children to mature and be on their own. The cost of term life insurance typically stays the same over the period of time that you carry the insurance so it makes monthly budgeting easier.
Other types of life insurance include whole and universal. These products are useful if your coverage period needs to be more than thirty years. These products have a few more fancy bells and whistles including the ability to earn dividends. Over time, these dividends can be used to offset the cost of some or all of your monthly premium.
Regardless of the type of insurance that meets your needs, the amount of coverage you should purchase is determined the same way. The goal is to replace the income that would be lost and have enough to pay for larger expenses like college, etc. For example, if your child is 8 and you want to ensure your wife and child have enough income until the child graduates from college you might build the following scenario:
Yearly Income Needed: $40,000
Cost of College: $40,000
Years until College Graduation: 13
Using the figures above you can estimate that $560,000 is ample coverage (13 years x $40,000 per year plus $40,000 for college). The cost of a half million dollars of term life insurance is only a few dollars a month but provides huge peace of mind for families.
by: Nathan Randall
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