Posted on June 22, 2021
Life Insurance: Protect What You Get
Although insurance is not an investment, it is an important part of sound and wise personal financial management. Insurance is protection. This protects your partner in the event of an early death. Sending kids to college.They brought the family together at a time when money shouldn't be an issue.
You need insurance, but finding the right insurance to protect your family and assets is like learning a new language. Life expectancy, lifespan, universal life, real money value, dividends, loans versus policies – it's a maze of insurance products and finding the right coverage for your needs takes a little research. You can also choose the right life insurance in Spain for you.
Here's an introductory course to getting the most out of life insurance while still having the protection you and your family need.
There are two main types of life insurance with many variations on a particular theme.
Term life insurance is the easiest to understand. It is also the most economical protection you can buy.
Term life insurance is paid if the insured (you) dies within a certain period of time – the period for which your life insurance coverage applies. Term terms have different time frames: There are terms of five, ten or even thirty years.
The younger you are, the lower the monthly premium – the dollar amount you pay for coverage each month. The premium is calculated based on two factors – your age (and general health) and the dollar amount you need. It's simple: $100,000 life insurance doesn't cost as much as a $500,000 policy because you buy less coverage.
Life expectancy makes things a lot easier. The insurance company pays X dollars to the beneficiary if the insured dies while the policy is in effect, i.e. death occurs during the term of the policy, hence term life insurance.
Term life insurance offers no added value, you cannot borrow, and if you choose short-term life insurance and your health changes, you may pay more for your term life insurance than if you got a long-term policy that covers you for the long term.
To determine how long you should live, add up funeral expenses, unpaid personal debt, mortgage debt, the prospect of school fees, and other major expenses that will drain the family's resources. Think about how much it costs your family in a year.
Then multiply by the ratio between 5 and 10. Use the lower ratio if you don't have a lot of debt and the higher ratio if you have a lot of mortgages and three kids have to go to school. This is the time it takes to protect your family and all their hopes.
Another class of insurance is life insurance, which is also known as permanent insurance, universal insurance, variable universal insurance and other product names, but they all belong to a general insurance class called life insurance.