Learn about life insurance

You are young, healthy and just getting started. Do you need life insurance? You bet! Life insurance protects your family’s income and lifestyle.

If you are single, life insurance can provide stability for aging parents or dependent siblings who count on you financially. With life insurance, your debts can be handled without financial harm to others. If you are married or have children, your life insurance will provide ongoing financial support for house and car payments, day-to-day expenses, tuition or even retirement savings.

Knowing your goals when you purchase life insurance will help you decide the coverage amount and type you need.

  • Term life insurance. Term life is purchased for a set term, such as 15 years and pays a set amount upon your death. If nothing happens to you within the term, the coverage goes away and your premiums are not refunded. Typically, term life purchasers are trying to cover:
    • Loss of income to family
    • Short-term debts
    • Tuition for spouse or children
    • Mortgage payoff
    • Funeral costs and final medical expenses
  • Cash-value insurance. These policies include whole life, universal life and variable life. Premiums paid into these policies go toward the death benefit and a savings component (cash value) in which earning accumulate tax-deferred. The cash value can be accessed while you are living, but those actions may affect the death benefit. Buyers of these products are usually looking for policies that are more permanent. Upon the death of the insured, a beneficiary generally receives tax-free death benefits.

The amount of life insurance you need varies according to your household expenditures, debt and the income your loved ones might need if you are gone. Buying into life insurance at a younger age reduces premiums, unless you suffer from a chronic illness or condition. Conversely, an unhealthy lifestyle and risky hobbies may increase life insurance premiums. Read the Life Insurance: Decoded topic to learn more about life insurance and calculate your needs.

 

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