Do you want to be able to provide for your family when you get older? Wouldn't it feel great knowing they have everything they need and never have to worry about money? But can you really do that if you unexpectedly pass away? No one wants to think that way, but it could happen.
You learned that insurance minimizes risk. Life Insurance minimizes the risk that your family will be left to pay your bills if you die and can no longer provide for them. In exchange for premium payments, the insurance company provides payment to beneficiaries, who were named by you the insured, when you decease.
Buying life insurance isn't always a priority because most people don't like to think about dying. But it's still good to understand it. Listed below are some questions regarding life insurance. Once you have had time to think of your response, click on the question to see the answer.
You should purchase life insurance if other people depend on your income or if you have debt that will carry on after your death. This will provide your family or friends money to pay for expenses and your debts.
The two types of life insurance are term and permanent. Term pays only if death occurs during the term of the policy, while permanent pays whenever you die.
Review the table below to see other differences:
| Permanent | Term | |
|---|---|---|
| Coverage Length | Coverage for life. | Temporary coverage; lasts a set number of years, i.e., 20 years. |
| Coverage Price | More expensive. | Less expensive. |
| Payout | Payout guaranteed no matter when you die. | Payout not guaranteed. If you die after the policy ends, no one would get the money. |
You will choose the amount of the payout you want your beneficiary to get. A beneficiary is the person you name to receive the money. The amount you purchase depends on your circumstances, such as how much debt you have. The average funeral costs around $10,000 so it may be a good idea to have at least that amount of coverage.
After you choose the amount and type, the life insurance company determines the premium you will pay based on your health, age, job, and family health history. Life insurance is more expensive if you purchase it when you are older.
Question
Why would you purchase life insurance if you have no dependents?
Life insurance provides money when an individual dies. You should still purchase insurance if you have debts that others may have to pay after your death. Also, you may want to leave money to other family members.
