Life insurance offers a way to replace the loss of income that occurs when someone dies (usually the person who produces the majority of income in a family situation). It is a contract between you as the insured person and the company or "carrier" that is providing the insurance. If you die while the contract is in force, the insurance company pays a specified sum of money free of income tax — "cash benefits" — to the person or persons you name as beneficiaries.
A good life insurance program does more than just replace the loss of income that occurs if you die. It should also provide money to cover the new costs that arise after your death — funeral expenses, taxes, probate costs, the need for housekeepers and child care, and so on. And these cash benefits should provide for your family's future needs as well, including college education for your children and part or all of your spouse's retirement needs. In almost all cases, your beneficiary can use the cash benefits in the way he or she sees fit, without restriction.
Some types of life insurance — permanent life insurance policies — have a cash value that you can obtain by cashing out the policy or by borrowing against it. Though it can seem attractive, most financial experts agree that this feature should be seen as a secondary purpose of life insurance. Another type of insurance is term life insurance policies are available as well. To learn more click the respected link.
Do You Really Need Life Insurance?
If there is someone who would suffer economic hardship if you died, then the answer is yes... you need life insurance! Families with young children have a clear need for life insurance. If both spouses work, the loss of one income will cause the family immediate economic hardship and make it harder for them to realize future goals, such as paying for the children's' education. But even if one spouse works "inside the home" and doesn't bring in a formal income, his or her death will require the surviving spouse to hire child care, housekeepers and other professionals to help run the household - and that can be a significant new expense.
If you are married without children or single, then you may need life insurance to protect your partner or surviving family members against the costs associated with your death. Funeral expenses, probate and administrative fees, outstanding debts, special obligations to charities, and federal and state taxes are costs that all of us must consider. And, they can add up quickly. Unless you already have sufficient financial resources, your survivors will probably need life insurance to cover these expenses.
What Happens To Your Family If You Don't Have Enough Coverage?
Under any circumstances, the loss of a loved one is a traumatic experience. But, if your family is also left without sufficient money to meet basic living needs or prepare for future goals, they will have to cope with a financial crisis at the same time. Depending upon their current financial resources and ability to "get back on their feet" emotionally and financially, your family might be forced to move to a less desirable home or community, abandon education and career plans, reorder family priorities (such as the amount of time spent with the children) and, in general, cut back on the quality of life you have worked hard to achieve.
Your family might even be forced to go into debt simply to pay the expenses, like funeral costs, taxes, and medical bills, that result from your death. A moment's reflection will tell you that the lack of sufficient life insurance coverage when a loved one dies can have devastating consequences for a family...consequences that can last for years.
Posted by thinley at 1:54 AM 0 comments
Senior Life Insurance - Life Insurance for Elders
No one wants to be a burden to their spouse and children — in life or even in death. This is the main reason why seniors often take a second look at life insurance.
Most seniors already have life insurance of some kind, but the death benefit often is too small to take care of funeral expenses and medical bills. In most states, a life insurance death benefit is exempt from creditors. It is also exempt from inheritance taxes. This makes it an excellent vehicle to transfer wealth to survivors.
Seniors often assume that they will not qualify for life insurance, but many states have laws requiring insurance companies to provide coverage to seniors. Since the senior population is growing fast, many insurance companies have found it profitable to offer life insurance to seniors.
Guaranteed Acceptance Life Insurance.
The best premium rates are offered to seniors who pass a health exam, but many companies offer insurance with no exam required. Typically these policies, known as Guaranteed Acceptance Life Insurance (usually a type of whole life insurance or universal life insurance) will pay a full death benefit in the case of accidental death as soon as the policy goes into effect. However, the policy will pay a limited death benefit if the policyholder dies of natural causes during the first two years of the policy. The insurance companies place these limits on the policies to avoid writing “deathbed” policies. The limited death benefit normally consists of the premiums paid plus interest. Once the two-year waiting period is over, the policy holder is fully insured.
Term Life Insurance for Seniors.
Many seniors, especially those on fixed incomes, do not look at life insurance as an investment opportunity. They are more interested in easing the burden of their death on their survivors. In these cases, term life insurance may be the best option.
Whole Life Insurance for Seniors.
Thanks to improvements in diet and healthcare, seniors are living longer than ever. As a result, there is a risk of outliving your term life insurance policy. Whole life insurance will cover you for your whole life, no matter how long that may be. The premium is fixed for the life of the policy. It cannot go up. The policy will build cash value. You can borrow that money or passed it on tax-free to your heirs. Whole life premiums can be much higher than term life premiums.
Posted by thinley at 1:51 AM 0 comments
Mortgage Protection Life Insurance - A Home Saver
Life Insurance to cover your mortgage can save your home.
Mortgage protection life insurance can be a lifesaver—not for the mortgage protection life insurance policyholder, of course, but for the mortgage protection life insurance policyholder’s family. Mortgage protection life insurance eliminates the risk of your family losing its home in the event that you die before your home mortgage is paid off.
Financial health during a terminal illness
Mortgage protection life insurance can also protect your home in the event that you are diagnosed with a terminal illness. Mortgage protection life insurance policies can be written to include a terminal illness benefit. The terminal illness benefit will pay off the mortgage while the mortgage protection life insurance policyholder is still alive.
The terminal illness benefit eliminates the burden of making monthly mortgage payments when the mortgage protection life insurance policyholder is no longer able to work or earn money due to the terminal illness. The peace of mind provided by mortgage protection life insurance can be a great comfort to a terminally ill patient. It allows the mortgage protection life insurance policyholder to rest easy, knowing that he or she has left the family a home that they own free and clear. It is a final gift to loved ones—a legacy of love and financial foresight that the mortgage protection life insurance policyholder can take great comfort in as his or her end approaches.
A mortgage protection life insurance terminal illness benefit also relieves stress on the terminally ill person’s family at a time when they have a great deal on their mind. Caring for a terminally ill family member and preparing for a future without him or her is one of the most stressful situations a family can face and doing so while struggling to save the family home can be overwhelming. A mortgage protection life insurance policy eliminates the worry of where the money will come from to make mortgage payments.
A financial control
Some people question that wisdom of mortgage protection life insurance because it limits a family’s options after the death of the mortgage protection life insurance policyholder. It is true that options are limited, but this is a major benefit of mortgage protection life insurance. A mortgage protection life insurance policy serves as a kind of financial control.
A standard life insurance benefit could be used to pay off a mortgage, but it also could be used for other purposes. Beneficiaries might choose to invest the death benefit, believing the return on the investment would be greater than the interest paid on home loan. The return on the types of investments that would outperform, say, a 5-7 percent mortgage interest rate cannot be guaranteed. In addition, grieving family members often do not make the best investment decisions. Add to the mix the fact that unscrupulous financial advisors may attempt to take advantage of grieving family members, and you have a recipe for financial disaster. The family may lose the life insurance death benefit and have nothing left to repay the mortgage.
Mortgage protection life insurance guarantees that the family will have a roof over its head no matter what financial decisions grieving family members make. Mortgage protection life insurance allows the policyholder to extend his or her decision-making power after death. He or she will enjoy the peace of mind of knowing for years—and even decades—prior to death that his or her death benefit will be used to secure a home for the family. The family’s largest asset will not fall prey to bad judgment or financial predators.
Posted by thinley at 1:46 AM 0 comments
Universal Life Insurance
Universal life insurance offers many features of whole life insurance, but allows greater flexibility once the policy is in force. Like whole life insurance, universal life insurance is a permanent policy. It protects the policyholder until death—however long that may be. Also like whole life insurance, universal life insurance accrues cash value over time.
Unlike whole life insurance, universal life insurance breaks the death benefit and cash value accumulation into separate components. This allows the policy holder to make changes in the policy. For example, if the policyholder wants to increase the death benefit, he or she puts more of the premium money into the insurance account and less into the cash value account. The reverse is also true. The policyholder can decrease the death benefit and increase the cash value contribution. To reduce premiums, the policyholder can pay only the insurance portion.
Once the cash value has accumulated, the policyholder can withdraw the money. The money must be paid back, or else the death benefit will be decreased. Some people use the universal life insurance policy as a savings account to draw on as they get older. Others use the accumulating cash value to increase the death benefit so they have more to leave their loved ones. Universal life allows these choices and decisions to be made throughout your lifetime.
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