Life Insurance - Life Assurance

The purpose of life insurance is to provide protection to your dependants should you die. Not everybody needs life insurance but if you have people who depend on your income as a means of support you will almost certainly need to have life insurance coverage. The last thing that you want to do is to leave your family with no means of support in the event that you die. If you decide that you do need life insurance there are a few other questions that you are going to need to ask yourself. The biggest being how much life insurance do you need?

The amount of life insurance that you need is going to depend on a number of factors, the biggest being the age of your children. Most experts recommend that you should have enough insurance to provide for your family until your youngest child graduates from college. This is fairly easy to figure out just determine your annual income and multiply it by the number of years that it will take until your youngest child has graduated from college. While this is an important factor in determining how much life insurance you need it is not the only one, you are also going to need to factor in how much debt you have.

If you die with debt you can rest assured that the people you owe money to, are going to go after your insurance money to make sure that they get paid. Given the number of people who have debt there is a pretty good chance that you will die owing money. The biggest thing that you are going to need to keep in mind is how much you owe on your mortgage. You should definitely make sure that you have enough life insurance to pay off your mortgage. It is also a good idea to make sure that you have enough insurance to cover the amount that you owe on your credit cards.

There are actually two different types of life insurance and you are going to need to make sure that you know the difference in order to make sure that you get the right kind to meet your needs. One type of insurance is an investment policy like whole life coverage. The other type is a protection policy like term life. An investment policy will not only provide you with the protection that you need it will also act as an investment. This may sound like a good idea but almost all financial advisors recommend against it. A term policy makes more sense since it will provide coverage for a pre-determined term at a much lower price.

If you are going to go with a term policy, which is highly recommended you will need to know how to pick an appropriate term. Again the usual advice here is to choose a term that will cover you until your youngest child has graduated from college. This will make sure that your children are taken care of in the event that something should happen to you.