Posted on Mon, Mar 08, 2010
By Bobbie Sage, About.com Guide
Life insurance is designed to protect your family and other people who may depend on you for financial support. If you die and lose your income, the people that are dependent on your financial support will lose that income, so life insurance can help cover some or all of that loss depending on the policy you choose. But there are instances where life insurance can be beneficial even if you have no dependents, such as your desire to cover your own funeral expenses. Here are some guidelines to help you decide if life insurance is the right choice for you:
1. Children: Children do not need life insurance. Yes, there have been cases where life insurance for one's child has been a blessing, but in the majority of cases, children do not need life insurance since no one depends on income from them. Learn more at Don't Buy Insurance You Don't Need
2. Beginning Families: Life insurance should be purchased if you are considering starting a family. Your rates will be cheaper now than when you get older and your future children will be depending on your income. Learn more at Parents: How Much Life Insurance Do You Need? 
3. Established Families: If you have a family that depends on you, you need life insurance now! This does not include only the spouse or partner working outside the home. Life insurance also needs to be considered for the person working in the home. The costs of replacing someone to do domestic chores, home budgeting, and childcare can cause significant financial problems for the surviving family. Learn more at Parents: How Much Life Insurance Do You Need?
4. Young Single Adults: The reason a single adult would typically need life insurance would be to pay for their own funeral costs or if they help support an elderly parent or other person they may care for financially. Otherwise, if one has other sources of money for a funeral and has no other persons that depend on their income then life insurance would not be a necessity.
5. Non-Child Working couples: Both persons in this situation would need to decide if they would want life insurance. If both persons are bringing in an income that they feel comfortable living on alone if their partner should pass away, then life insurance would not be necessary except if they wanted to cover their funeral costs. But, maybe in some instances one working spouse contributes more to the income or would want to leave their significant other in a better financial position, then as long as purchasing a life insurance policy would not be a financial burden, it could be an option. For a low cost life insurance option look into Term Life Insurance
6. Elderly: As long as you do not have people depending on your income for support, life insurance at this stage in life would not be necessary, unless again, you do not have any other means to pay for your funeral expenses. But, be aware that purchasing a life insurance policy at this age can be very expensive. Before doing so, first talk to a financial advisor or accountant about looking into other saving options to pay for your funeral costs before considering life insurance.
Posted on Wed, Feb 18, 2009
In the thick of an economic slump as 2009 begins, many consumers aren't likely to have "buy life insurance" at the top of their to-do lists.
Yet life insurance is indispensable. Parents and business owners-indeed, anyone who has people dependent on them financially either at home or at work-can benefit from the unique advantages of life insurance.
In the United States, consumers and businesses owned more than $19 trillion of life insurance as of year-end 2007, reported the American Council of Life Insurers.
Yet a myth persists that life insurance is too costly, falsely contributing to the perception that life insurance is not a necessity. But life insurance has actually declined or flattened in price in the past several years, according to a recent report by the Insurance Information Institute.
A 2008 survey by the Life and Health Insurance Foundation for Education noted other obstacles for consumers: 23 percent of consumers just had not gotten around to buying it, and 22 percent confessed they did not know enough about it.
What is life insurance? Life insurance is a financial contract in which a life insurance company agrees to pay an amount of money to a person upon the death of another person, in exchange for regular payments (known as premiums).
Life insurance serves two key financial functions. First, it's a tool for prepaying for immediate expenses needed soon after the time of a person's death. Second, it's a way to generate substantial investment capital to produce future income (to replace income that an insured person would have been providing if they had not died).
Because a deceased breadwinner no longer is providing an income stream from salary, commissions or wages, a family needs to have invested funds that can generate replacement income. Likewise, a business owner who passes away leaves behind co-owners and employees who need funds to replace the person's expertise and revenue-generating capabilities, or to restructure the business.
Life insurance provides that large sum of capital, at a time (death) that cannot be predicted.
To determine if and how much life insurance is appropriate, a Trusted Choice® independent insurance agent or broker can help answer two important questions:
1) How much cash will be needed upon the death of a parent, business owner, or other individual? These immediate costs often include uninsured medical expenses and funeral expenses. Additionally, many consumers and business owners have financial obligations that do not go away upon death: a mortgage loan, auto loans, business loan or line of credit, credit card debt and college costs, to name the most common.
2) How much annual income would sustain a household? An estimate of income for a family starts with the amount of income earned in the year prior to a breadwinner's passing. From there, additional expenses (child care, for example) should be added; while living expenses for the deceased person can be subtracted.
A Trusted Choice® agent can help calculate the amount needed today that would provide an annual income for a certain number of years in the future. That's the starting point in a decision of how much life insurance you need for your family or business.
Your Trusted Choice® agent can help sort out other potential sources of funds, such as Social Security benefits, pension income, group life insurance benefits, and investment income from other assets. These amounts typically reduce a person's need for life insurance, but don't eliminate the need.
Life insurance comes in two broad types: term (or temporary) and permanent (or lifetime). Term life insurance pay benefits if the death of the insured person happens during the "term" of the policy (anywhere from one year to as much as 20 years). Permanent life insurance pays benefits no matter when the insured person dies. (It is known as "whole life" since it is in force the whole lifetime of the insured person.) There are varieties of permanent life insurance, such as universal life, variable life and traditional whole life.
More than 1,000 licensed life insurance companies in the United States make for a competitive marketplace for consumers. That competition has driven down costs for term life insurance, reported the Insurance Information Institute, while keeping permanent life insurance costs stable.
Premiums are calculated for each person who applies for life insurance, based on cost tables. Age (the older, the higher the cost) and health status are two key factors life insurers use to set premiums. One lesser-known discount: per-unit cost for life insurance goes down with larger amounts purchased.
Life insurance is distinct from other financial products because of two key tax advantages: the money paid into a permanent life insurance policy can accumulate free of income taxation; and the benefits paid from a life insurance contract are free of income taxation.
Some people may think they can live without life insurance, but in reality it's their families and businesses that cannot. If you want to start 2009 by increasing the financial security of your family or business, contact a Trusted Choice® insurance agent or broker to begin a discussion of life insurance needs and solutions.
Article provided by: http://www.trustedchoice.com/
Gaudette Insurance Agency is proud to be a Trusted Choice® insurance agent.