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What Life Insurance Can Do For You

April 13, 2012 | Comments: 0 | Views: 199

Life insurance is important because it protects a person's family or designated beneficiaries financially in the event that the person holding a policy dies. Because it guarantees that the policyholder's beneficiaries will get the death benefits, every person should have his or her own policy.

Besides providing replacement income in the event of the policyholder's death, a life insurance policy can also act as an investment option which can serve as a person's pension plan in the future. A person who has a life term insurance policy will be able to do the following:

1. A policyholder can provide financial security for his/her family in the event of his/her untimely or unexpected death. When a policyholder dies, death benefits in the form of cash will be given to his/her designated beneficiaries. This cash will serve as the income that will be lost with the death of the policyholder. Depending on the amount purchased by the policyholder, the coverage may be enough to shoulder the needs of the surviving family for a number of years.

2. A policy holder may protect his/her home mortgage. The cash that will be given to the beneficiaries may be substantial enough to cover any existing mortgages left by the policy holder. A policy holder can assure that his/her family will still have a roof over their heads even if he/she dies.

3. A life insurance policy will also allow a policy holder to take care of estate planning expenses and costs. Even if it is a cheap life insurance policy, the amount of cash benefit that a policy holder can get from it may be enough to at least subsidize the cost of estate lawyers who will be responsible for making sure that the policy holder's assets are distributed to their respective heirs.

4. Depending on the type of policy, a policy holder may also benefit from his/her policy through a retirement savings option which he/she may utilize even if he/she is still alive. A permanent life policy allows such investments to happen and the policy holder may take out the equivalent cash value which he/she can use during his/her retirement years. Term life insurance quotes do not include an investment option and are therefore significantly less expensive than those of a permanent life policy.

When choosing a policy, it is important to consider the needs of your family first. Does your family need a large coverage so that their needs will be covered even after your death? There are basically three types of needs of your family that must be considered when choosing the amount of coverage. The first need is the immediate needs which include the costs for funeral services, settling unpaid financial obligations and hospital or hospice services. The second need is the recurring needs which include all the necessary daily expenses that your family must pay for them to live their daily lives. The third need is the future needs which include the cost for sending your children to college or for your spouse's retirement expenses. There is a common rule that policyholders follow when choosing the amount of coverage. It is commonly followed that the amount of coverage must equal at least ten times the amount of a policy holder's annual salary.

There are many types of life insurance policy out in the market. Different insurance companies compete with each other and most often than not, some companies offer a more attractive policy than others. When choosing a life insurance policy, you must make sure that the company behind the policy is a credible and reliable one. Ask your friends who have their own policies for recommendations or referrals. It is also advisable to shop for life insurance online and checking the insurance companies reputation through better business websites. Surf for online forums that discuss life insurance policies and read the different posts concerning complaints about insurance companies or policies.

A life insurance policy will be able to protect the policy holder's family in the event of the policy holder's death, however; it is important to first check the reliability of the insurance company behind the policy. So be cautious in purchasing your first life insurance policy and always read the fine print.

Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information on cheap term life insurance, visit his site today.

Source: EzineArticles
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