Our loved ones mean the world to us, and we would do anything to protect their safety and happiness.
Investing in the right life insurance policy ensures that we can continue to care for those closest to us, even after we’re gone.
What Is Life Insurance?
A life insurance policy is an arrangement in which a policyholder makes premium payments to an insurance company. In return, should the policyholder die, the company provides a lump-sum payment, or death benefit, to the contract’s beneficiaries. Certain contracts will pay this sum in the event of critical or terminal illness.
The beneficiaries of your life insurance policy are any individuals who depend on you financially. Life insurance guarantees that your family will have the money to pay off debts and compensate for the unexpected loss of income, in the event that something happens to you.
Why Should You Buy Life Insurance?
Losing you would be devastating for your loved ones. While financial security could never ease the pain of your absence, it can lessen the fear and distress your family endures after you have passed.
Protect your loved ones from the financial burden your sudden absence would bring. Life insurance allows your dependents to pay for daily living expenses, like rent or groceries, and to cover any outstanding medical and funeral costs.
Protect your business. Should something happen to you unexpectedly, life insurance provides vital assistance to your partners and employees so they can continue running the business.
Protect your beneficiaries. If your estate is subject to tax, life insurance enables your beneficiary to cover those costs without having to sell off any valuable assets.
In purchasing a life insurance policy, you are purchasing a future for the ones you love.
How Are Life Insurance Rates Determined?
Life expectancy is the foundation for determining your life insurance premium.
If you are in poor health or suffer from a condition that could reduce your life expectancy, you will likely pay higher premiums to compensate for the increased risk of mortality.
Life insurance companies evaluate many factors, including:
- Your Current Age
The older you are, typically, the greater your risk of mortality.
- Your Sex
Women tend to live longer than men, on average.
- Your Current Health
High blood pressure, heart disease, and other health conditions may have an impact on your life expectancy.
- Your Family’s Health History
Your genetic predisposition to certain health conditions can affect the length of your life span.
How Much Life Insurance Do You Need?
Determining the exact amount you will need is no easy task. Your life insurance plan should ideally provide your dependents with enough money to pay necessary expenses and live comfortably.
Consider all the benefits you currently provide to your family, including salary, health insurance, mortgage, retirement savings, educational expenses, as well as any personal services you perform, like home maintenance or childcare.
Once you have an estimate for these benefits, subtract the amount of money you spend annually on personal needs, like food, clothing, and entertainment.