Hal

Dallas, Texas

Great Question Hal,

When you buy a life insurance policy, your beneficiaries can use the money to cover the bills you leave behind. Believe it or not, the costs associated with your funeral and burial will likely reach many thousands.

In addition, there may be costs involved in settling your estate. You may have medical bills that your health insurance did not cover or other types of debt. When your loved ones are grieving, they don’t need the additional burden of worrying that these expenses may potentially spell financial ruin.

Here’s another reason to consider. When you buy a life insurance policy it can be used as a way of leaving something of value to your heirs. All you have to do is name as beneficiaries the individuals you choose to inherit your policy.

Or, instead of naming individuals as beneficiaries of your life insurance policy, you could choose a charity as the beneficiary.

Given the above reasons, buying a life insurance policy just might make sense after all!

Morgan

Dallas TX.

Well Morgan,

With Term Life Insurance it provide a certain amount of coverage for a set number of years. Your premium never changes with in that time frame.  Usually this type of life insurance policy has a lower monthly cost .  In the event of your death, the policy pays your beneficiary the amount of the policy.

Where as Whole Life Insurance pays a death benefit whenever you die — even if you live to 100.  The premiums tend to be more expensive in order to make up for the increased length of coverage.  These policies can also allow for a cash accumulation which is available for the policyholder to withdraw after a certain time.

Which insurance policy is right for you? That depends on your situation. Term Life insurance is great for young adults that have mortgages and other debts. Thsi will cover you if you are the breadwinner and something happened to you untimely death.

Whole Life Insurance is more expensive to cover the length of the policy. And is usually used in addition to other retirement plans they may own.

Hope this helps in your decision and thank you for asking a great question.

Frank

Arlington, TX.

Frank,

You may have term life insurance with your employer, with coverage equal to one or two times your annual salary. This is usually not enough life insurance to protect your family. Instead, you may need five to ten times your annual salary, depending on how many teen and how much debt you have.

Let’s assume that you contribute $50,000.00 per year in income or services to your household. If you were to die, let us further assume it would take approximately $50,000.00 per year to compensate for the financial hardship your loss creates. Deciding on the correct amount of coverage for that situation would require you deciding how many years after your death your lost contribution would need to continue.If we assume that the financial hardship created by your loss would only last 10 years after your death, then you would multiply $50,000.00 by 10 to arrive $500,000.00 as an adequate death benefit. In a situation where the financial hardship would last for the life of the beneficiary, a death benefit amount should be selected that if invested at a conservative rate of interest would yield a yearly return of $50,000.00. For example, a $500,000.00 death benefit invested at 10% would yield $50,000.00 per year.

Thanks for asking a great question.