Life insurance lets you protect your family in case of your untimely death by paying out a specified amount to your beneficiary. It offers money for funeral costs, medical expenses and future life expenses. You get to determine the amount of your life insurance policy as well as its type when you buy one.
When should you get a life insurance?
If you are single with no dependents then you don’t need a life insurance. You can get a simple policy via your employer that will cover your basic burial expenses. A life insurance policy becomes a necessity when you get married and have kids or if you accept guardianship of your siblings or other dependents.
How to choose the right amount?
The amount of life insurance depends on your financial situation and life. In case you are single, the amount offered by your employers would be suffice to cover your burial expenses. If you are married with children, you need to increase the amount of life insurance coverage. You need to decide the annual cost of living for your family and then determine the amount of life insurance you need to buy.
Selecting the right kind of life insurance
Once you have determined the amount you require and have taken into consideration your financial obligations, the next step is to select the best type of coverage yourself. The two basic types of life insurance plans include Term life insurance and Whole life insurance. You can buy term insurance at variable amounts for a specified amount of time. Generally these time lengths include 5, 10 or 20 year policies. If you go for term plan, you need to self-insure by the time policy ends or take a new policy. Term insurance is the most affordable option among insurance policies. Whole life insurance accounts for a cash value policy that you buy for your complete life. This is the most expensive insurance option and you need to pay a higher premium for it. The benefits of this insurance comprise of a constant premium, opportunities for tax saving and lifelong coverage.