Life Insurance Policy
Which life insurance policy should you buy? You will at some time
in your life come to the conclusion that you need to buy some life
You have a pretty good idea how much you need but deciding
which life insurance policy
is best for your particular need is another question. There are many to
May be if we examine the varying reasons why people buy
life insurance and which policy best fits a particular need you would
more easily come to a decision. Here goes.
There is nothing more important than your family's security. What would
happen to your family if you died? Would they be provided for? Compare
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Which Life Insurance Policy Do You Need?
- Mortgage Life Insurance Protection
Most people have a desire to own a house at some time. Some
are small and cozy and seem to just ooze family. Others are larger and
may seem to project affluence and success. One thing they all seem to
have in common is that this piece of property is very important to it's
Sometimes it is simply pride of ownership that drives a person
to buy a house. In other situations this home is bought because the
couple may just want a home for the family. They want their children to
know that this is their home.
You buy homeowners insurance to protect your home in case of fire
or any type of disaster that may destroy it. You also need to buy some mortgage life insurance
in the event of the death of the person who pays the mortgage.
the best policies to use is the decreasing term policy. You buy this
policy for the duration of the mortgage...for example 20 years. Upon
your death the insurance company pays your beneficiary an amount equal
to the balance owed...
They therefore have a house free and clear. Some people prefer to use, for our example, a 20 year level term
life insurance policy. If you died in the first year the same amount
would be paid to your beneficiary but if you should die for example in
year ten there would be sufficient money to pay off the mortgage but
there would be considerably more cash that your loved ones would
- Family Protection
One of the main reasons for buying life insurance is for the protection of your family in case you should prematurely die. They will need money to pay last expenses like burial costs, probate costs, attorneys fees and of course the big one...estate taxes.
Although the congress has repealed the estate tax it has been done on
somewhat of a sliding scale until the year 2010...so the fact is that if
you are in that tax bracket you have estate taxes to pay upon death.
You also must consider that your family still needs your income
after your death. You need a policy the proceeds of which can be paid
out in the form of an income.
The best way to do these things is to buy a
policy to take care of the cash needs and another life insurance policy
that would provide income at your death. In either case the most
commonly used policies are the 20 year term life, the 25 year term life or the 30 year term life insurance policies.
Some people like universal life insurance,
variable life insurance, variable universal life insurance or whole
life insurance. These life insurance policies include cash values which
you could use during your lifetime.
- Business Life Insurance Needs
Small business owners need for life insurance policies differ
from individual need or family protection needs even though the focus
still is in the surviving family.
A corporation or a business
partnership would buy life insurance on each of the partners or
stock holders that would provide sufficient cash to buy a deceased
partners or stock holders shares from his or her heirs.
A buy sell agreement
is drawn up by an attorney. It is funded by life insurance and is
binding. Most business people use 20 year term life insurance policy or
the 30 year term life insurance policy for this. Any of the permanent
cash value policies can also be used.
Business owners may also buy life insurance to protect the
business against the loss of a valuable key employee. The business would
own the policy and also be the beneficiary.
Upon the death of the key employee the cash from the life insurance policy would be used to help the business stay afloat while they search for a capable replacement.