Personal Finance - Why do we need Life Insurance?
What if something happens?
If you are in the middle-age of 25-40, you will have dependent spouse and children. You need to support financially your spouse and children. Think about a worst situation that is what will happen to your spouse and children, either if you become disabled or lost your life? This is the time you need life insurance. Life insurance policy can pay either annuity or whole lump sum amount specified in your policy.
Risks with Employer Sponsored Life Insurance Plan
Some people might argue that employer might cover life insurance up to US$ 100,000 – US$ 500,000. So it is unnecessary to have another life insurance policy. Again consider a worst case, what if you lose your job at the age 45? You may say that you can apply for life insurance at the age of 45? Yes, you can do it. But there is a check point. To apply for $ 500,000 coverage for 20 years term life insurance might cost you more than $ 150 - $ 500 per month, depends on how health you are. If you need one million US$ coverage, the cost per month would be $ 250 - $ 750 per month. It is very expensive at the age of 45. Rather you can consider taking life insurance policy when you are young, preferably under 30 – 35. You have to go through a medical checkup when you apply for life insurance policy.
Life Insurance Policy Terms and Conditions Keep Changing..!
One better thing about life insurance policy is, if you are disabled, you do not have to pay the premium per month. It will also be covered under the policy, not all policy supports this option. But make sure that your policy supports that option or demand for that option. The policy terms and conditions keep changing on-going basis targeting the profitability of the life insurance company.
Be clear on what you want!
Before applying for either term life or whole life policy, make sure you understand all the benefits and terms and conditions of the policy. Each and every time, policy terms are subjected to change. So when you lock in a good rate when you are young, make sure you clear all your doubts.
It is wise to take life insurance policy when you are young, even though your employer supports life insurance coverage.
Now the question whether to go with term life or whole life insurance? Click on the links below to read about it!
- Term Life Insurance
- Whole Life Insurance