What Are My Life Insurance Needs?

You may be wrestling with the idea of when and how much life insurance you should buy. You don't want life insurance rates that are too high, but you want enough to cover your individual expenses.

Each individual will have a different set of needs, so it's best to speak with your insurance agent to determine what will work best for your given situation.

Keep in mind that at the time of an individual's death, there are a number of expenses that need to be met.

The expenses can include things like burial expense, funeral costs, present bills and estate taxes. Also note that there can be financial needs the insured would have met in the event they remained alive. Those expenses can include things like long-term debt, college costs for children and mortgage payments.

The major function behind a life insurance policy is at the time of death of the individual there is a sufficient amount of income available to pay for any and/or all of the preceding expenses.

What most consumers will want to know is how much coverage they should actually have?

Be sure to take into account the different needs for funds at the time of death so as to come up with a proper level of insurance.

While it is not set in stone, some life insurance agents recommend that a good rule of thumb to go by is having five times your annual income.

In the event you are wondering if it matters how you die as to the amount the beneficiaries can collect, it does.

During the first two years for the policy period, there can be conditions such as suicide, fraud, not providing the proper age, etc. that can impact the death benefit paid out by the policy.

Following two years, the entire policy death benefit is payable, regardless of the cause of death. Some policies will also pay additional benefits in some conditions, like when the insured passes away in an accident.

Some consumers will wonder if they need to die for loved ones to collect life insurance.

When it comes to term insurance, the answer is yes.

As for permanent insurance, as the living benefits grow, they can be used to provide funds for financial needs like loans, retirement benefits and premium payments.