- Personal Finance»
How to Know if You Really Need Life Insurance
Insurance can give you peace of mind in the event of unexpected expenses or emergencies. Some insurance, such as car insurance, may be required by law, while other kinds of insurance are not. This can lead to questions about what kinds of insurance policies you should take out, and which ones you are not likely to need. One important insurance that you should consider is life insurance.
- How to Teach Kids About Money
The sooner you teach kids about money the better. The way we spend money says a lot about our values. Kids are learning by our actions even when we don't say a word, so you may as well tackle the subject...
- Save Money with a Healthcare Flexible Spending Account (FSA)
Many employers allow employees to set aside money in a Healthcare Flexible Spending Account (FSA), which is a reimbursement account where you set aside pre-tax dollars to pay for eligible healthcare expenses...
While all insurance plans offer you protection against things you hope will not happen (theft, injury, illness, or automobile accidents), life insurance guards against perhaps the most disturbing possibility of all—the death of a member of the family. Life insurance pays a lump sum to remaining family members in the case of the policyholder’s death. This fund is meant to protect loved ones against financial burdens in the future, such as mortgage repayments, salary repayments, child care, education, or existing debts. It can also be used to cover burial costs. Dealing with the death of a family member is difficult enough, but adding financial woes to the mix can really exacerbate a family’s suffering.
Life insurance is sometimes called “life assurance” or “term assurance,” and comes in several different forms, including level term, decreasing term, critical illness, and family income policies. These policies can usually be taken as single or joint life policies.
This form of life insurance is the most common, and will pay a lump sum to the policyholder’s family or dependants upon his death. You must usually take out this policy for a fixed term—usually a minimum of 10 years—and the sum to be paid is fixed throughout the life of the policy.
This is also known as “mortgage protection cover” and is used to cover capital and interest payments on a mortgage. The sum to be paid decreases throughout the duration of the policy as the policyholder owes a decreasing amount upon the mortgage.
This insurance pays a lump sum if the policyholder is diagnosed with a long-term illness, or suffers a major accident such as a loss of limb or paralysis. This insurance can be used in addition to any regular health insurance the policyholder carries.
Family Income Benefit insurance provides ongoing tax-free income
for the policyholder’s dependants throughout the policy term. This income may
be adjusted to account for inflation, but usually remain constant.