Life insurance provides your beneficiary with money upon your death, to help with your final expenses, to pay commitments you left behind and for their own use. Although death benefit ist he main reason most people buy insurance, some life insurance policies can benefit you, the insured, while you are still living.
Here are some of the reasons you need life insurance:
- Pay your last expenses, which may include estate taxes and burial costs
- Protect your family's home by giving them money to pay off the mortgage and other debts
- Maintain your family's standard of living by replacing your income
- Pay child care expenses including paying college fees
- Provide supplemental retirement income for your spouse or partner
If your spouse contributes to your family's annual income, then you should have adequate life insurance on yoru spouse to ensure that their income is replaced in the event of his or her death. If your partner does not contrinbute financially, it is still a good idea to have insurance because you may need to replace a valuable service once performed by your partner. eg. home care and providing child care.
There's no single correct answer to tell you how much you need. Typically, however, it can range anywhere from 2 to 10 times your annual gross salary but because people's circumstances differ from person to person, it is best to consult an insurance career agent to assist with determining how much is appropriate for you.
Life underwriting takes several factors into consideration such as: your height, weight, current health, medical history, family history, occupation, hobbies, driving record, and whether you have ever smoked or piloted a plane. These factors are evaluated at the time you apply to determine if you are a candidate for insurance and the price you should pay in exchange for the level of risk you are to the company. IF you are in good health, your insurance rates are likely to be lower than those of a person with health issues.
Although you have access to life insurance through a group such as your place of employment, there are several questions to consider when determining if and how much individual coverage you should purchase.
- How long will your job last and will you still have your group life insurance coverage if you leave your job?
- Can you convert your group life to an individual policy if you leave or are terminated? The cost to do this is usually very high to an individual.
- Do you have enough coverage from yoru group life insurance?
- What is your present and likely future state of health? If you are in good health, then that's the best time to buy individual insurance.
Here are two good reasons to consider purchasing life insurance on, or better yet, for your child:
- Premiums on the life of a child are the lowest possible. If your child were to purchase the same amount of coverage as an adult, the annual cost would be much higher.
- Although children are usually much healthier than adults, they many become ill as an adult and may not b e able to purchase life insurance. Buying insurance for your child ensures that they will have life coverage, providing the policy remains in force.