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Life Insurance can be very easy to understand
Just about everyone needs life insurance. Life insurance is basic financial
protection for your family. Because families are different and circumstances
are different, types of life insurance are different.
The role of life insurance is to provide a lump sum of money (the "death
benefit") in the event of your death to:
- Cover your debts, including the mortgage
- Provide an income while the family makes the
transition to continuing without you
- Provide a nest egg for family or a favourite charity
- Make sure children have money for post-secondary education
- Provide money to pay for burial expenses
There are different types of life insurance for different types of
people. Depending on your
needs, there are different types of life insurance.
For some people, Term Life Insurance gives great
value because it provides coverage at comparatively modest cost. However,
term insurance does not build up cash value, and when the term expires
there’s no guarantee that you will qualify for a new term policy. If you do
qualify, the premium will probably be higher because of your older age.
For some people, Whole Life Insurance is good value
because it helps build cash value that can be borrowed against if need be.
The premium for Whole Life remains the same forever.
And whole life insurance is just that: once it’s in force, it can’t be
retracted as long as the premiums are paid. Another plus to whole life
insurance is that it is eligible for declared dividends, which can be taken
in cash or applied to reduce premium or taken in additional insurance and
increase cash values.
For some people, Universal Life Insurance
provides the flexibility they want. The flexibility to fine-tune how much goes toward your insurance premium and how much is
deposited into your investment accounts. The flexibility to choose
investment accounts from among stocks, bonds, money market funds or interest
accounts. What’s
more, this flexibility is available not only when you purchase the policy,
but all through its life, to accommodate changes in your circumstances or
economic conditions. You can think of it as life insurance with investment
options added.
How do you decide how much insurance is enough? How does the size and ages
of your family factor in?
Did you know that as you get older the same coverage costs more? Regardless
of what type of insurance you prefer. Because as people age they tend to
have more health problems and are more likely to pass away, and that affects
the cost of supplying the insurance. So it’s generally better value to start
early.
Another key to understanding life insurance is to have one person you can
trust and work with. A Foresters representative can help you choose the
right insurance for your life and help you understand how insurance fits
into an overall financial strategy.
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for Americans
