Why Families Shouldn’t be Without Term Life Insurance

My father died when I was nine. He left behind my mother and four children aged between seventeen years and nine and no money. Sure I missed him but at nine I didn’t really have much idea about death or loss. I know it sounds selfish but what I really missed was our old lifestyle. We had to move house because we lived in a company house and couldn’t stay there anymore. We had to give up our car because that was provided by the company too. All we could afford was a run down council house. It was small and cramped and didn’t have much in the way of fences so we felt we had neighbours right on top of us. This was all salt to the wound of our grief, all these niggly things that had now become our life. I don’t know why my father didn’t take out life insurance, all I know is that he didn’t and we bore the consequences of that decision for a long time.

It has made me wonder why so many people roll their eyes when the words ‘life insurance’ are uttered out loud. Sure I can understand not wanting to contemplate a scenario that would require you or your family to actually need it but that is no excuse for ignoring it altogether and not planning ahead. Imagine, just for a moment, your family?s life if the worst was to happen and you didn?t have life insurance?

The purpose of life insurance is to guarantee an income to your spouse and children if you were no longer able to contribute to their welfare like you do now. Think about it, if something were to happen to you, could your family afford to live in your current home? Would there be enough money to maintain their current lifestyle? Would the cost of a funeral become a burden? Would your spouse be able to support your family easily? Or would the stress and grief and financial burden of loosing you cause unendurable hardship for them?

Maybe you think that because you have saved and invested wisely and setup a solid foundation that despite missing you, your family would be OK financially. The reality is that it is unlikely. This is particularly true for families with young children. This is often a time where families are still struggling to become established and often debts are high, savings low, caring for children is costly and income may not be at its peak or perhaps one partner is out of the workforce to care for the children. Of course, it is this time when funds are often stretched that life insurance is most needed but often that very fact puts families off from the regular commitment of insurance premiums.

But the good news is that it makes you a good candidate for term life insurance because it is the most inexpensive form of life insurance around. The premiums for term life insurance are worked out based on your age and health and is usually purchased in terms of a specific number of years ? 1, 5, 10, 20 or whatever period you would prefer. The upshot is that term life insurance has the highest coverage for the lowest premiums.

While term insurance is not ideal for older individuals as prices go up substantially with age, it is the a great solution for younger couples or families who have high debts including mortgages, life expenses and dependants. The insurance can cover you while your children grow and the mortgage is paid off. By the time the policy expires you will more than likely have invested, paid off your major debts and no longer have dependants.

So Who Needs to be Covered with a Life Insurance Policy? Given that insurance is really about income protection ? providing funds when you can’t ? you would normally cover whoever is contributing to the family finances. So first up, make sure the primary income earner is covered. If this income disappeared then you want to make sure the ongoing family needs are covered.

But don’t stop there. If your spouse looks after the children full-time and something were to happen to them, how would you fund childcare? Insurance could cover that additional cost. So if any secondary income is relied on to cover expenses either through income or an unpaid contribution then that person should also have an insurance policy.

Do you need to get life insurance for your children? Generally, this is only advised if you can’t afford funeral expenses (generally about %5000). Otherwise, there is no reason for children to be insured as they do not contribute to the family income.

Having life insurance not only gives you peace of mind knowing your family will be taken care of after you or your spouse has gone, it may well be one of the best financial decisions your family could make.

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Term Life Insurance vs. Permanent Life Insurance

Choosing a life insurance plan is difficult; it takes a lot of time and research in order to ensure that all aspects are thoroughly examined before making a final decision. There are basically two forms of life insurance to choose from: term life insurance and permanent life insurance.

Below you will find valuable information regarding both forms of life insurance as well as other helpful information which will assist you in deciding which form of life insurance is best suited for you and your situation.

The first thing to do is to research and understand the concept of both forms of life insurance. These two forms of insurance have been compared to buying or leasing a car. Term life insurance is much like leasing a car, you can purchase insurance for a specific number of years, but once those years are up, so is your insurance coverage. Permanent life insurance is similar to buying a car. When you buy a car, it?s yours and you can drive it forever if you like. Permanent life insurance stays with you until you die.

Depending on your situation, each form of insurance can be very beneficial and offer many great opportunities. Below you will find a more in-depth explanation of each form of insurance providing advantages and disadvantages of both.

Term Life Insurance

Benefits
? Term life insurance is inexpensive and can cost a considerable amount less than permanent life insurance.
? There are no strings attached with this form of insurance and you are free to stop paying whenever you want.
? You can begin using term insurance and if you feel like you want more coverage, you can then convert to permanent life insurance if you wish.

Downfalls
? Term life insurance only provides coverage. There are no other rewards and there is no cash value.
? Yes you are free to stop paying whenever you please, but should you choose to do so you will no longer have any life insurance coverage.
? Term prices increase at a rapid pace as you get older and as you get older, your need for this type of insurance will become more and more crucial.

Permanent Life Insurance

Benefits
? Permanent life insurance can accumulate into cash value and savings. Any cash value which you receive will be tax deferred.
? There is no risk involved in this form of insurance. Your loved ones will receive a death benefit regardless of when you pass away, whereas term life insurance will only pay out if you happen to be covered when you die.
? You can borrow the cash value you receive to pay for college, a vehicle, etc. You can do this without receiving a penalty for doing so.

Downfalls
? The most noticeable disadvantage to permanent life insurance is the cost. This form of life insurance will cost you a great deal more than term life insurance.
? Should you decide to forgo your permanent life insurance coverage, you will be required to pay a large penalty which will be bounded by law.

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10 key reasons why a person needs life insurance

Insurance is designed to protect a person and the family from disasters and financial burdens. There are many kinds of insurance of which, the basic and most important is considered to be life insurance. It provides for the dependants after your death.

Since there are certain financial commitments you need to meet throughout life and do contribute in some way to the family income, you need to provide something even in death?to secure the home, help the family meet expenses for a while, protect dependant parents, or secure the children or spouse.

Financial obligations could include funeral expenses, unsettled medical bills, mortgages, business commitments, meeting the college expenses of the children, and so on.

How much insurance a person needs would vary, depending on lifestyle, financial needs and sources of income, debts, and the number of dependants? An insurance adviser or agent would recommend that you take insurance that amounts to five to ten times your annual income. It is best to sit down with an expert and go through the reasons why you should consider insurance and what kind of insurance planning would benefit you.

As an important part of your financial plan insurance provides peace of mind for any uncertainties in life.

1. Life insurance correctly planned will on premature death provide funds to deal with monies due, mortgages, and living expenses. It offers protection to the family you leave behind and serves as a cash resource.

2. It secures your hard earned estate on death by providing tax free cash which can be utilized to pay estate and death duties and to tide over business and personal expenses.

3. Life insurance can have a savings or pension component that provides for you during retirement.

4. Some policies have riders like coverage of critical illness or term insurance for the children or spouse. There are certain rules regarding eligibility for riders which you will need to determine clearly.

5. Having a valid insurance policy is considered as financial assets which improves your credit rating when you need health insurance or a home loan or business loan.

6. In case of bankruptcy, the cash value as well as death benefits of an insurance policy is exempt from creditors.

7. Life insurance can be planned such that it will cover even your funeral expenses.

8. Term life insurance has double benefits, it protects and you can get your money back during strategic points in your life.

9. Insurance protects your business from financial loss or any liabilities in case a business partner dies.

10. It can contribute towards maintaining a family?s life style when one contributing partner suddenly dies.

Insurance is vital to good financial planning and security but you would need to assess your personal risk and long term commitments. Insurance stands a person in good stead throughout life and can be used in case of emergencies during a life time by requesting a withdrawal or loan.

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Car insurance can really take a bite out of your wallet. Especially if you’re a young driver or a driver whose record is less than perfect, even vehicle liability insurance can become almost unaffordable, unless you know where to look.

Where do you go to find the cheapest auto insurance? The best places to look online are at sites that can get comparative rates for you and the best one of these is a website called CarInsuranceRates.me. That’s right, “dot me.” A better name for this company would be “Car Insurance Rates For Me,” because they specialize in finding the best automobile insurance rates for your personal needs.

This company does much more for you than just get you comparative rates from the most trusted insurance companies. Right on the homepage, they urge you to read their fact sheets before you make your decision. Armed with the knowledge they give you, you will be in a better position to make the right choice for you.

Their “Basic Information” page is full of helpful information about all of your insurance options. Did you know, for instance that comprehensive insurance does not cover loss of your vehicle due to traffic accidents, but only those that are caused by acts of nature like hurricanes, etc? Many people believe that “comprehensive” means an insurance that includes all eventualities, but that is not the case.

Do you know what “no fault’ insurance is? This is insurance that covers your medical expenses no matter who is at fault in an accident. Only twelve states are allowed to offer such insurance. You can learn more about this, your vehicle liability insurance and much more when you visit the Car Insurance Rates website. Once you know everything you need to know, then you can use the site to find the best deal for your needs.

Term Life Insurance

Term life insurance is a life insurance product that pays out a cash lump sum upon death of the insurance policyholder or at the point that the insurance policyholder is diagnosed as terminally ill. But, despite it being a low cost term life product - insurance cover can be acquired from as little as ?5-?10 per month - surprisingly few of us have term life insurance in place.

For people with a mortgage and family to support, not having a term life insurance policy exposes them to a large financial risk. This risk becomes apparent when you consider how the mortgage and household bills would be paid if the main income producer were to die or to become terminally ill. The end result could be that loved ones who are left behind find their home is repossessed because they cannot keep up the mortgage repayments.

Some people prepare for such an eventuality by taking out a mortgage life insurance policy. This is all well and good for covering off the remainder of the mortgage loan, but where will the money come from to pay the gas & electricity bill and the council tax bill every month, let alone the money needed to cover the policyholder’s funeral expenses? It is at this point that a term life insurance policy becomes very useful indeed.

If you don’t have a term life insurance policy in place, here are some sobering reasons why you should consider taking out a term life policy now?

? CANCER - One in three people will develop cancer at some point in their lives. Research into cancer is of course ongoing, and one day some cancers may be curable. In the meantime a term life policy offers income protection for loved ones left behind in the event of terminal cancer diagnosis and death from cancer.

? HEART DISEASE - Heart and circulatory disease accounts for more than 35%PRCTG% of all deaths in the UK each year. The number of people dying from heart and circulatory disease is on a falling trend, but the number of people becoming morbidly obese is increasing, and so may reverse this trend in the near future. Term life policies can be configured to pay out if cause of death is heart-related.

? MRSA (SUPERBUG) - The death rate from the MRSA superbug has doubled in the last 4 years. MRSA is a bacterial infection that is resistant to antibiotics. It commonly causes death in people with weak immune systems, and so easily spreads amongst the sick & old in hospital wards. Many life insurance policies pay out if the cause of death is MRSA related.

? AVIAN FLU (BIRD FLU) - Recent comments by the Society of General Microbiology in the UK sparked controversy when they estimated that 2 million people in the UK could die from a highly infectious strain of mutated Avian Flu. If you are worried about Avian Flu check with the life insurance agent to see if their term life policy covers such an eventuality.

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Cheap Term Life Insurance

Should you buy cheap term life insurance? It’s an often-asked question to which there is a cheap and simple answer. If you have a mortgage or you have a partner, family or dependants that could suffer financial hardship as a result of your death then cheap term life insurance is a must!

Cheap term life insurance, otherwise known simply as life insurance or term life is a cheap life insurance policy that pays out a lump sum upon your death. The premiums are very cheap and term life insurance policies are very easy to obtain. There are two basic types of term life insurance available from insurers - cheap decreasing term life insurance and cheap level term life insurance.

Cheap decreasing term life insurance

Cheap decreasing term life insurance is very cheap. For only a few pounds each month a cheap decreasing term life insurance policy will pay the balance of your mortgage should you die before it reaches full term. This type of term policy is called decreasing term life insurance because the sum insured decreases in line with your outstanding mortgage balance. The cheap premium remains the same for the life of the policy, making it an exceptionally cheap way to secure life insurance. A cheap decreasing term life insurance policy ONLY pays out a lump sum to clear your mortgage. This type of cheap term life insurance does not make any other provision for the loved ones you leave behind.

Cheap level term life insurance

Level term life insurance policies are not as cheap as decreasing term life insurance, although these types of term policies overall are still cheap, having only slightly higher premiums attached to them. The reason for the premium not being as cheap is that level term policies pay off your mortgage AND leave a lump sum to your partner, family and/or dependants. The sum insured through a cheap level term life insurance policy remains the same through the life of the policy, as does the cheap premium.

A cheap level term life insurance is recommended to run in tandem with your mortgage. However, a cheap level term life insurance policy can run differently from the term of your mortgage. For instance, you could take out a 10-year level term life insurance policy that is separate from any other cheap premium life policy covering your mortgage. The premiums on the 10-year insurance policy will not be as cheap because the term is short, but it will provide you with additional life insurance cover in the unfortunate event of your death.

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Term Insurance

Term insurance is a level term life insurance product that pays out a lump sum when the insurance policyholder dies or becomes terminally ill. It provides peace of mind to the insurance policyholder that loved ones left behind after their death will be financially secure. Term life insurance can be configured to pay off all existing loans - including the mortgage - and leave a cash sum in the bank to support your spouse and children. If you don’t want your family to have to cope with financial pressures during their bereavement, or struggle to find the funds to pay for your funeral then term insurance is the life product to have.

Term insurance is different to mortgage insurance
It is important to realise that term insurance is a different life product to mortgage insurance. Term insurance is a long-term insurance product that can be taken out over a lifetime of 50 years. During this time the insurance premium remains the same as does the amount paid out in the event of death or terminal illness.

Mortgage insurance on the other hand mirrors the life of your outstanding mortgage loan. The insurance premiums remain the same throughout the life of the product, but unlike term insurance the amount paid out upon death or terminal illness reduces in line with the outstanding mortgage loan. So, if you were to die at the point that you owe only ?2000 on your mortgage, then the mortgage life insurance product would only pay out ?2000.

Terminal illness
Terminal illness cover generally comes as standard with term life insurance polices. The terminal illness clause tends to trigger pay out if the insurance policyholder is diagnosed with a terminal illness named on the term policy and is given 12 months or less to live. Pay out in these circumstances allows the policyholder themselves or someone with power of attorney for the policyholder to receive the full lump sum from the term life insurance policy. They are then free to enjoy the final months of their life with their family free from financial constraints.

When a term life insurance policy pays out for terminal illness the policy will end. Therefore the life insurance company will not be liable to pay anything further upon death of the policyholder.

Term life insurance restrictions
As with most insurance policies there are restrictions and exclusions that apply to term life insurance policies. The main restriction is on pay outs to term life insurance policyholders who become critically ill, yet are not diagnosed as terminally ill. In this case, a standard term life insurance policy will not make a payment, unless a critical illness policy has been added to the term life insurance.

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A CPA Talks About Buying Life Insurance

Not everyone needs life insurance. The first thing to do is make sure you need it. Life insurance is really meant for your family members or other dependents who rely on your earnings.

Why You Buy Life Insurance

You buy life insurance so that, if you die, your dependents can live the same kind of life they live now. Strictly speaking, then, life insurance is only a means of replacing your earnings in your absence. If you don?t have dependents (say, because you?re single) or you don?t have earnings (say, because you?re retired), you don?t need life insurance. Note that children rarely need life insurance because they almost never have dependents and other people don?t rely on their earnings.

Life Insurance Comes in Two Flavors

If you do need life insurance, you should know that it comes in two basic flavors: term insurance and cash-value insurance (also called ?whole life? insurance). Ninety-nine times out of 100, what you want is term insurance.

Term Life is Simple to Buy and Understand

Term life insurance is simple, straightforward life insurance. You pay an annual premium, and if you die, a lump sum is paid to your beneficiaries. Term life insurance gets its name because you buy the insurance for a specific term, such as 5, 10, or 15 years (and sometimes longer). At the end of the term, you can renew your policy or get a different one. The big benefits of term insurance are that it?s cheap and it?s simple.

Cash Value is Trickier

The other flavor of life insurance is cash-value insurance. Many people are attracted to cash-value insurance because it supposedly lets them keep some of the premiums they pay over the years. After all, the reasoning goes, you pay for life insurance for 20, 30, or 40 years, so you might as well get some of the money back. With cash-value insurance, some of the premium money is kept in an account that is yours to keep or borrow against.

This sounds great. The only problem is that cash-value insurance usually isn?t a very good investment, even if you hold the policy for years and years. And it?s a terrible investment if you keep the policy for only a year or two. What?s more, to really analyze a cash-value insurance policy, you need to perform a very sophisticated financial analysis. And this is, in fact, the major problem with cash-value life insurance.

While perhaps a handful of good cash-value insurance policies are available, many? perhaps most?are terrible investments. And to tell the good from the bad, you need a computer and the financial skills to perform something called discounted cash-flow analysis. If you do think you need cash-value insurance, it probably makes sense to have a financial planner perform this analysis for you. Obviously, this financial planner should be a different person from the insurance agent selling you the policy.

What?s the bottom line? Cash-value insurance is much too complex a financial product for most people to deal with. Note, too, that any investment option that?s tax-deductible?such as a 401(k), a 401(b), a deductible IRA, a SEP/IRA, or a Keogh plan?is always a better investment than the investment portion of a cash-value policy. For these two reasons, I strongly encourage you to simplify your financial affairs and increase your net worth by sticking with tax-deductible investments.

If you do decide to follow my advice and choose a term life insurance policy, be sure that your policy is non-cancelable and renewable. You want a policy that cannot be canceled under any circumstances, including poor health. (You have no way of knowing what your health will be like ten years from now.) And you want to be able to renew the policy even if your health deteriorates. (You don?t want to go through a medical review each time a term is up and you need to renew.)

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Convert Term Policy Before It Expires

Keeping an inexpensive term life insurance policy for too long can cost unprepared families lots of money in the long run.

While term insurance is a great way to protect your family from financial disaster, sitting on the same policy until it is too late to replace it with a permanent options can be a financial disaster.

Term life is temporary insurance. It pays a fixed death benefit if the policy holder passes away during a set period of time. For example, if you have a 20-year term policy and you die before the 20 years end, your beneficiaries will receive the face value of your policy.

Once the 20 years is up, the contract expires. The company keeps your premiums and you have to find new insurance, usually at a higher premium. Term insurance helps you to prepare for the unexpected.

Term insurance is the cheapest form of life insurance because it is temporary and not intended to pay out. Young families benefit from term insurance. In many cases, it is taken out to help support young children and a spouse in case the primary breadwinner passes away. That takes a large policy to accomplish.

Many young adults do not have substantial savings and investments yet. They have a lot of their money tied up in new mortgages and student loans. Term policies offer a cost-efficient solution.

But as families mature, the breadwinners grow older and the policies get closer to expiration. Situations change and families need to consider changing their term insurance into a more permanent option.

Many term insurance contracts have a clause that allows the policy holder to do just that.

You could think of it as leasing insurance with an option to buy. You can use the convertibility clause to convert without having to obtain a new insurance policy. For a price, families can transform their temporary insurance into permanent insurance without having to re-apply for coverage or have medical examinations.

Not all policies have conversion clauses. If you are buying term insurance, look for policies that include the clause. They are often more expensive, but well worth it.

For example, you have a 20-year term policy with a 10-year conversion clause. After nine years, you develop a major health problem. You are still within the 10-year conversion period, so you can convert the policy to a permanent policy. By doing so, you will not need a new physical exam and you will receive your coverage at a much lower rate than if your health problems were taken into account.

If the policy didn?t have the conversion clause, you would be facing an expiring policy and very expensive renewal premiums ? if you could renew at all. You should always convert before it is too late.

You should review your policy with your agent on a regular basis. This will help to prevent that your conversion expiration doesn?t sneak up on you. When you are within a year of convertibility, you should take the time to look at your plan. Consider your health, finances, responsibilities and goals.

Don?t just look at your health in considering whether or not to convert a policy. The older you are, the more expensive you are to insure. By locking in a fixed rate and paying toward a permanent policy in your 20s, your monthly premiums will be much cheaper than if you had waited until your 50s.

Your financial needs transform over time. Your family matures and changes. When you are young, you often need a policy to replace your income and provide for your children. When you are older and your children are grown and your mortgage is paid off, you may find that you don?t need such a large policy.

The roughest rule of thumb is to take a multiple of your income. If you only need enough insurance to take care of your family for a few years after you die and set them up until they can get on their feet, buy 4-6 times your annual salary. If you want to take care of them for the rest of their lives, you can look at something quite larger, like 20 times your salary. That gives enough to establish a trust that they can life off of indefinitely.

One strategy involves buying the largest term policy you can afford when you are young. When you can afford more, supplement your term policy with a small permanent policy.

When your term insurance is set to expire, your children will be grown and your mortgage paid off. Then you can look at what coverage you will need.

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Getting Life Term Insurance?

Do you know what life insurance is and how it work? If not, then read on to learn more about it. This insurance is the kind that the insured transfers a risk to the insurer; they will then get a policy and pay a premium. The risk that is assumed is the risk of death, but of course it could be something else.

For the most part there are 3 groups of people involved in a life insurance transaction, the insurer, the insured or the owner of the policy and the beneficiary. The contract of the life insurance is a legal contract that specifies the risk assumed. It can be nullified for different reason. For example, if the insured commits suicide within a specified time for the policy date. You should read the fine prints and ask what other reasons it can be nullified there won?t be any surprises for you and your family.

The main reason most people buy life insurance would have to be to protect their financial interests in chase of death. Charges of life insurance depends on many things for instance age, diseases etc. So there is a wide rang of prices on life insurance that you could pay. Basically, the more of a liability you are the more you will pay.

But if the insured death seemed to be suspicious and the policy amounts warrants it, the insurer can investigate if they want whether there is any evidence of its legal obligation to pay the claim. The proceeds from the policy can either be paid in lump sum or over time as regular payments for their life or a specified time.

Hopefully this article has cleared up a few things about life insurance for you. So you can decide whether life insurance is in fact right for you and your family.

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