Life Insurance - One More Step On The Insurance Ladder


 Life Insurance - One More Step On The Insurance Ladder

I’ve been writing about insurance for a long time now, and since it’s a topic of interest to many people, I often get questions from readers about life insurance. So I thought it might be helpful to share some of the tips I’ve learned over the years.

Here are some key aspects of life insurance that many people don’t know:

• Life Insurance is not just for funeral expenses, but can also cover other costs if there is no spouse or children to provide for them.   • Your life insurance coverage extends to your beneficiaries even if you die in an accident or from natural causes. In fact, it can be more valuable than your will if you want to ensure that certain people receive more money than others. • The person you name as your beneficiary should be someone who believes in life insurance, like a trusted financial advisor or accountant. This person should also have the means to pay any benefits you leave behind.   • The amount of life insurance coverage you need is based on both your age and risk factors, such as who you might marry. To find out how much coverage is right for you, talk to an agent and have a frank discussion about what situations could be most likely to occur over the course of your life. Here are some other questions to ask:

• Is an investment property like a house or an investment portfolio one of the things I need to consider? • How much money do I have in cash that I could access quickly if needed? • What kind of lifestyle and health history do I have? • Are my debts included in the calculation, such as credit card debt, mortgage or car loans? A life insurance policy can be the best way to reduce your overall borrowing and increase your financial margin. 

The Role Of Life Insurance In Your Life Cycle
One of the time frames that one needs to contemplate when taking a look at life insurance is their life cycle – how long they expect  to live for. The life cycle begins when you are born and ends when you die. It is broken up into stages that include infancy, childhood, adolescence, young adulthood, mid-life and old age and the elderly. Each of these stages is reflected in the amount of expenses  and income one needs or expects to have as they go through each stage of their life.

The first big expense one normally has to contend with at the infant stage in their life cycle is paying for your education. Having some kind of life insurance policy to cover this expense can be extremely important if a parent or parents are unable to do so for whatever reason, including death, disablement or job loss.  In fact, many parents worry more about this expense than any other in their life cycle.

The next stage of the life cycle is childhood and adolescence. Here, one normally pays for food, clothing and education for themselves or their kids. Again, the death of a parent or parents can turn this into a great burden on the financial resources of children who would then need to rely on grandparents or other relatives. An insurance policy can help in such a situation because it can be used to pay these expenses with ease. Therefore you need to consider life insurance as you create your financial plan during your child's early years.

As a child becomes an adult, and moves into the young adulthood stage of their life cycle, they normally have to start paying for clothes, entertainment, housing and transportation. This can involve car payments or college tuition. Again it's not uncommon in this stage for a person to still rely on their parents or other relatives financially. Life insurance can help in such situations as well if a parent dies because it can be used to pay for the education expenses that were started before one's death.

For many people in young adulthood, mid-life is the time when they start raising families of their own. Without life insurance, those families can easily be left without sufficient financial resources to raise their children and keep a comfortable home.

In old age one is most likely to face health care expenses. Without life insurance these can be extremely costly. What happens if you need surgery but don't have enough savings to cover that expense? Or what if you are faced with a serious illness and there's not enough money to pay for the medical bills? An insurance policy can help solve these problems because it pays for these medical expenses.

The last stage of the life cycle is when one reaches old age and then needs long-term care or nursing home care in their later years. Without life insurance you might be left with a great burden on your finances even if you have access to a pension or retirement plan. Many people reach this age not really knowing what will happen to them in the later stages of their life. A life insurance policy can help ensure that you and your family have adequate financial resources to take care of any such expenses.

There are two basic types of life insurance – term and permanent insurance coverage. Life insurance is a form of wealth preservation, which is why it's generally not appropriate for young adults who still have time to build up their financial resources for retirement and/or college savings. (Note that some policies DO provide riders, or add-ons, which can provide income for retirement).

Term insurance usually provides coverage for a stated period of time (e.g., 10 years, 15 years or up to age 79). The policy allows you to withdraw the cash value or use it as part of your estate planning. It's considered a "short-term" form of life insurance that typically carries a monthly premium and can be canceled during the term without penalty.

Permanent life insurance, on the other hand, provides coverage that can last for as long as you live, or until your death. It's ideal for those who wish to ensure their financial security beyond what term insurance can provide. Permanent life insurance typically comes with fewer costs. It usually offers cash value and thus a tax-deferred investment component and, although it can be canceled prior to maturity, in most cases the policy's cash value is lower than the cost of premiums after 3 to 5 years.

Factors that determine your premium rate include your age (age 35-49 will likely be charged a higher premium over someone in their 50s), health (specifically whether you're considered "preferred" under the insurance company's rating system) and amount of coverage you want. Some people may qualify for natural life insurance policies at no cost.

In addition to the factors listed above, you may be able to decrease your premium rates with greater life insurance coverage. A higher amount of savings may be needed at this point in your life cycle for you and your family to deal with the expenses of living during old age. A permanent life insurance policy that offers a good death benefit can help provide the funds necessary for you and your family to live comfortably when you're older.

Each state's Department of Insurance governs what is considered a suitable amount of coverage for a term or permanent  life insurance policy. These limits are set by each state's legislature and are subject to change from year to year.


Life insurance is a form of insurance that provides a lump sum payment to a beneficiary in the case of the death of an insured person. Because it involves some risk, there will normally be premiums involved as well. These premiums are where your premium rate is determined by several factors, such as age, gender and health.

The need for life insurance has grown since the beginning of the 20th century to help protect financial security not only for one's family but also in case one dies prematurely. Life insurance can help individuals and families with unexpected expenses such as those related to major medical conditions or premature deaths due to accidents or other causes.

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