Why should I buy life insurance in the first place?
Most of us are responsible for the care of other people. They rely on us for food and water, shelter, schooling, medical and dental insurance, and other of life’s necessities. We often take these things for granted. Our life goes on in a certain way, that that’s the way it is: we pay the bills, and we pay them more or less on time, and because of that our families live more or less healthily and happily. Questions about life insurance, such as why buy it in the first place, and, if I decide to buy, how much should I buy, have both simple and complicated answers. The simple answers are that life insurance is a way to ensure that your family, in the case of your death, would go on living the sort of lifestyle that they’ve become accustomed to. How much life insurance you need depends on how much you make a year currently. You want your life insurance to cover what you would have made until you retired. That way, even in the case of your death, you can provide for your family. Financially, it’s as if you’re still around: the amount of money coming in is the same amount that came in when you were alive.
What are some other reasons for buying life insurance?
Other reasons for buying life insurance (and these factor into how much you buy as well) include leaving an inheritance behind, leaving a legacy. Estate tax issues are also involved, as you can formulate your life insurance policy to take care of these. You may want to leave an inheritance for your family that is larger than what you would have made by retirement. Or you may want to leave behind a certain amount of money for your favorite charities. Life insurance gives you these options as well.
How do I know how much life insurance I need to buy?
Again, you want to calculate how much money you make a year and how much you would make in total until the day of your retirement. You add that number together, and that’s approximately how much life insurance you need.
Are there other factors to consider?
Yes. The calculation referred to above doesn’t take in other things, other costs that come up when a person dies. There are special taxes involved when a person dies, and the cost of burial itself can be very, very high. The purchase of a coffin and a burial site can often cast as much as a new, expensive car. You’ll want to calculate these sort of expenses in when figuring out how much life insurance you need.
What does the term “rated policy” mean when buying life insurance?
“Rated policy” refers to a situation wherein the insurance company providing the policy has special considerations to make considering a client who is more likely to suffer health problems (for example) than another client. Rated policy refers to smokers, persons with dangerously high cholesterol, and other such persons. Rated policy holders will often have higher monthly payments, higher premiums. Rated policy holders might have special exclusions in their policy, things that aren’t covered that are covered under a normal health insurance policy. The good news for rated policy holders is that even people with health problems going in need not despair of ever having life insurance. Rated policy life insurance is something developed by life insurance companies so that people with special needs can be included as well. If suffering from particular health problems, or if suspecting that you are such a sufferer, you’ll want to search the internet carefully for the best rated policy programs. Rated policy programs offer different price ranges and different benefits. As with anything else available to the consumer, rated policy insurance programs want to compete for their customers.