Insurance is a way of protecting against financial loss. This is a type of risk control, mainly used to protect against the possibility of a potential or unknown failure.
Obtaining life insurance can provide your dear ones with insurance compensation from losing your income after you’re gone. More than 40 percent of American households (about 4 out of 10) would have an economic effect within six months of the main wage earner’s death, according to LIMRA.
So, cash from an insurance policy that might help your family cover expenses like a mortgage or a car loan can be a reason to consider getting a long term care insurance plan. What’s the term policy though, and how do you decide if it’s good for you?
Word insurance is a form of life insurance scheme that provides protection for a specific duration of time. The length of the cover may be as low as one year (though seldom provided), 5, 10, 20, or up to 30 years. The key advantage of a life insurance contract is that a death payout is provided to the recipient if the policyholder dies on an active policy.
HOW MUCH LIFE INSURANCE IS GOOD FOR ME?
The level of pay you require depends on considerations such as your age, marital status, family size, and living expenses. Some financial reports, including CNN Money, say that your death payout will be 7 to 10 times higher than your annual salary.
For a young family in their 20s, insurance companies usually allow a death benefit that’s up to 30 times greater than their annual salary, while a young family in their 30s could get a death benefit up to 20 times above their yearly wages.
SOME KEY POINTS WE NEED TO KEEP IN MIND:
- The amount of income or lifestyle you wish to pay to your spouse and/or dependent children.
- Amount of debt you have.
- Other income you receive from things like rental properties.
- Amoun of money you have in assets
When you get an estimated amount of money you need to cover your family’s future expenses on a monthly or annual basis, subtract any money you have in assets, and additional income you get from several other sources. The resultant value is the disparity you’d like to fill with life insurance.
When, for example, that amount is $30,000, you will need 7 to 10 times the amount of term insurance coverage, which will be $210,000 to $300,000. If you need up to 30 times your annual salary, that’d be $900,000.
TYPES OF INSURANCE POLICY
Level Premium Term: This type of agreement typically means that the premium rate remains the same from the moment you apply to the completion of the policy period. So if you get a 20-year policy with an insurance payment of $250, you may have that rate for all 20 years. About all health insurance offered is a fixed premium benefit plan as it provides the finest life insurance coverage at a reasonable rate.
Annual Extension Contract: This type of term agreement is rarely provided to individual customers because it has the least cover to satisfy family insurance needs. Annual benefit plans are typically made available by state insurance programs for corporate life insurance purposes.