Coverage for life insurance is unique. Unlike auto or health insurance, you will never purchase a life insurance policy for yourself. How would you use it since you would be dead? The payout from life insurance would be a direct payout. The money from your life insurance will help your family with any bills you have left and with the cost of your funeral.
Term Vs. Whole
Term life insurance is exactly what it sounds like. It is only valid for a certain period of time. Most term life insurance is paid each year and only covers you if you die during that year. There is no cash value on term life insurance. Some plans are renewable.
Whole life insurance lasts, as the name indicates, your entire life. It is very useful because it covers needs that don’t disappear through the years. Some of those needs are the costs of settling an estate and your taxes. Another advantage to whole life insurance is that your premium stays the same throughout the insured’s life.
How Much Whole Life Insurance Do You Need
The premiums on whole life insurance vary based on your individual and family needs. Many people buy too much life insurance, but you can also buy too little life insurance. If there is a mortgage or college tuition to cover, a policy of $50 or $100 thousand dollars won’t begin to cover expenses. The best way to see how much whole life insurance you need is to use a life insurance calculator. An internet search for “whole life insurance calculator” will yield several options. You will need to enter your assets that can cover your end of life costs. You will also have to enter the expenses you expect your family to have at the time of your death.