Do you need life insurance? It's a question many ask, but few find easy to answer.
You need life insurance if you believe you'll leave behind financial obligations. Life insurance benefits can provide food and shelter for children and other dependents. It can also be used to pay your final expenses.
To decide whether you should have life insurance, first determine what financial obligations you will have when you die. Each obligation should be offset by sufficient life insurance protection. Your insurance agent can help you determine how much you need.
If you own your home, consider purchasing mortgage term insurance, which will pay off your home in the event of your death. You can also purchase short-term life insurance, which can be used to pay off auto loans.
Consider what type of life insurance you need – there's term life and there's whole life. Term life is the most basic form of life insurance. This type of policy is written for a specific period of time, usually from five to 10 years. Each time the policy expires, the premiums can become more expensive. The benefit is paid on upon death.
Whole life insurance is a policy with a savings component attached. If you pay your premiums, you can lock them in, and benefits are paid at the end of the term, even if no death has occurred. Premiums for this type of insurance are usually higher, since there will be a payout at the end of the policy, regardless of whether there's been a death.
Before you sign up for any insurance, get several quotes, and read the fine print. Don't leave your family to deal with red tape on top of their grief – get the best deal for your situation, and for your loved ones.