If you are a young couple who is starting a family you may not think about things like illness, death and life insurance. Most likely you are concentrating on buying a home or buying stocks for investment. You're building your nest egg for your family and also for yourself. The hard fact is that injury and death can happen at any stage of life. How do you protect your family? Life insurance is such a protection, which helps make the family future secure.
Only the primary breadwinner in the family needs it.
Even if you are not working, your family will miss the contribution to the household if it disappears. Take into account that you are providing family services such as child care, cooking, housecleaning and household management. These replacement costs are often severely underestimated.
Can always renew the term policy - when it ends.
Why go in for term policy? Because it offers the greatest coverage for the lowest cost.
Term insurance provides protection for a specific period of time (the 'term'), and can be ideal for people who feel they have temporary needs, such as a mortgage or a child's education. However, many families realize that even after the kids are gone, their need for insurance continues - to provide income for a surviving spouse, eliminate debts, pay taxes, etc. Because premium rates increase with age, renewing your policy when the term expires can be more expensive. Moreover, poor health may make renewal impossible.
It’s needed only when kids are young and financial obligations are the greatest.
There is no question that insurance needs are great when your children are young, There is college planning, mortgage payments and the costs involved in raising your kids. But for people with insurance needs later in life, permanent insurance is often a good choice. In addition to providing the opportunity for lifelong protection, permanent policies accumulate cash value that can be borrowed against or withdrawn, though doing so may affect the death benefit and have tax consequences.
Although permanent insurance premiums are generally higher than term premiums when first purchased, they typically do not increase over time and can stop completely later in life, even as your coverage continues, depending on your policy.
Can get a better rate of returns if money is invested elsewhere.
While the first and foremost reason for any life insurance purchase is to provide protection for your family, permanent insurance policies, such as whole life, universal life, or variable life, offer other features that many people find attractive. Specifically, permanent policies provide a cash accumulation value that grows over time and can be borrowed against. And contrary to what many people believe, long-term rates of return on the cash value are generally comparable to relatively low risk investment products. Because understanding rates of return is often difficult, the best way to find the right products for your needs is with the help of a qualified insurance agent or other financial advisor.
