life insurance –
who needs it and what
should you have
Life insurance doesn’t benefit the person
that dies; it benefits those who are the
beneficiaries. There are many types and
many reasons to buy life insurance but you need
to consider the needs of your family and how long
they will need protection.
life insurance for the living
The best life insurance policy is one that pays
the biggest benefit. If there are young children
you should have a term life insurance policy and
if both parents work, there should be disability
insurance as well. And anyone with dependents
or liabilities, should move to protect themselves
at the lowest possible cost.
do i pay forever?
The reality is that the policy should benefit the
surviving spouse after the children have left home
if you do not have a lot of assets.
term life insurance
The two most common types of life insurance
are term life insurance and whole life insurance.
Term life insurance offers coverage for a specific
number of years with a set premium. If you choose
a policy to age 100, you are buying a policy, similar
to whole life but without the cost.
The biggest drawback is that you can keep on
paying and have no value if you decide to cancel.
But that is what life insurance, or any type of
insurance is about, risk.
You insure your car and house, but you don’t
secretly hope to have an accident or your home
burn down. And whenever you sell either, you
cancel the policy but don’t receive a refund of
And so it is with term life insurance. It is just
that; insurance against an event that may happen
prematurely. And if you decide to keep it, your
purpose has changed from protection against
death to the provision of the proceeds to your
family and loved ones.
whole life insurance
Term life insurance is up to five times cheaper
than whole life and for that reason, provides
up to five times greater coverage. This type of
policy will provide a cash value at a later date
but remember that you have paid a fair amount
more in premium.
And this cost of term life insurance compared to
other types, holds true until the older ages. Then
both types must be compared to see which offers
the greatest advantage.
Both policies offer protection but a very different
When you are younger, the two best reasons to
buy term life insurance are that it is cheaper and
gives you greater coverage.
When you are older, your needs have changed. If
you have become wealthy, perhaps you need to
continue with the coverage to pay income taxes. If
not, perhaps you will need to keep the coverage so
that your spouse can buy a life annuity to provide
just that, an income for life.
By Ivon T. Hughes