Life Insurance Company is life insurance for a set period of time. If the insured dies during this period, the beneficiary receives a lump sum of tax-free money. Life Insurance Company is ideal for young families with a limited budget where as much insurance as possible is required to secure the family's well being, or in business situations such as buy-sell agreements, for mortgage coverage, or to fulfill other temporary needs.
For most people, the purpose of life insurance should be to replace the financial contribution made by a family member.
Life insurance company can be pure insurance, which pays only on the death of the insured, or cash value insurance, which also has a savings vehicle. Most people who need life insurance are better off with pure insurance and saving for retirement through other vehicles.
Life insurance cover three types of expenses :
replacement of the policyholder's income or work, estate taxes, and burial costs. When you consider the amount of insurance to buy, consider the following :
- Most of the life insurance should be on a family member whose salary is important to the family budget.
- Consider a relatively small life insurance policy on a stay-at-home parent to cover child care and other expenses.
- Consider reducing the amount of life insurance you have as you build more financial assets.
- Pass on credit life insurance and mortgage life insurance if you can. These plans are restrictive and expensive. Buy more general life insurance from life insurance company if you feel a need.
- Pass on life insurance altogether if you are single and don't have anyone depending on you. At most, get a small policy form life insurance company to spare your family burial expenses.
