Life
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Listed below are some of the most frequently asked question regarding life
insurance. If you have further question, please feel free to contact us.
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| Life Insurance is a policy that will pay a specified sum to beneficiaries upon the death of the
policyholder. Life insurance is a contract between the
policyholder and the life insurance company. If the policyholder
dies while the contract is in place, the life insurance company must
pay off the beneficiaries of the life insurance policy. Such
payments are income-tax free. The "cash benefits"
provided by the insurance company to the beneficiaries
must not only compensate for the income
loss due to the death of the policyholder, but must also pay for the expenses
associated with the death (i.e. funeral costs, taxes, etc.) as well as
for the future needs of the policyholder's family.
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If your death will result in financial burdens being placed upon anyone you know than you
need life insurance. If you are single, you need life insurance to protect your
family. If you are married, you need life insurance to protect your spouse. If
you have children, you need life insurance to protect their future. Costs will add
up after your death (funeral costs, taxes, etc.), therefore you need life insurance to
protect the ones you love.
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| While it is difficult
to predict exactly how much life insurance one should purchase, there is a general formula
to abide by. If the individual has a family of four (one breadwinner and two
children) than the individual needs to purchase a life insurance policy equal to 5 times
his or her annual income.
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| In general, term life
insurance policies are taken out on an individual for a specified period of time (i.e. 10
years). Whole life insurance policies are taken out for the duration of the
insured's life.
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| When setting up a life
insurance policy, one must name a beneficiary (the individual or estate the insurance
company must pay the death benefits upon the death of the insured). Many
consideration must be made when naming a beneficiary including: 1. Choosing an individual beneficiary rather
than an estate. Policies payable to an estate may get tied up in court.
2. Naming a contingent or
secondary beneficiary in the event the insured outlives the primary beneficiary.
3. Changing beneficiaries as
soon as need be.
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| In the event the life
insurance policy taken out is not sufficient, the insured's family may be forced to
sacrifice their standard of living to pay for the costs that accumulate after the death of
the insured. It is, therefore, critical to purchase the life insurance policy that
fits the individual's specific needs.
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| If you cannot find the
information you are looking for on this site try our resources page
where we have provided you with links to numerous sites with insurance-related
information.
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