But what is it exactly, and how does life insurance work?
At its basic level, its an agreement between you and a life insurance company.
You agree to pay them and in turn, they provide you with insurance coverage.
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Well that really depends on you.
Maybe you want your kids to afford college.
Terms to Know
Premiums:The amount of money you pay in exchange for coverage.
You set it in advance when buying a policy, and it passes to them tax free.
Beneficiaries:The people who will receive the coverage amount.
Filing a claim:The process by which your beneficiaries can claim the coverage amount if you die.
How Does Life Insurance Work?
Life insurance works like a subscription model: as long as you pay premiums, youll be covered.
That process is called underwriting.
Once youre approved and have accepted your offer, youll start paying premiums.
Do I Need Life Insurance?
Now that you have the basics, you might wonder if you need life insurance.
To find out, ask yourself the following question: would your absence cause anyone financial strain?
If so, the answer is yes, you need life insurance.
Lets take a look at the five top reasons you may need life insurance.
You Have Kids
Anyone with children should consider life insurance, whether they earn a salary or not.
Life insurance can also meaningfully contribute to college savings.
You Run a Business
Life insurance can be extra important for small business owners.
You might have taken on business debt using personal assets, like your home, as collateral.
In that case, life insurance can help pay off debts that your family might otherwise have to cover.
You may want to consult with an attorney to ensure this is set up appropriately.
Your Life Insurance Through Work isnt Enough
Most likely, its not.
you’re free to calculate your needs more exactly using anonline calculator, like the one offered byLadder.
