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Home » Insurance » Life Insurance

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    Efinancial | Insure For Life Online

Life Insurance

I always think of life insurance as “betting that you are going to die”. In a way, it is, but it is also a safe bet. Do you honestly think that you are going to live forever? Obviously you want to live a lot longer, but you never know what is going to happen.

Life insurance isn’t designed to protect you; it is for protecting your loved ones if you are no longer able to provide for them. At this current moment, I have no life insurance. This is because I don’t have any kids or any dependants of any sort (yet). Once I have a baby on the way, I will secure some sort of life insurance. For right now, nobody is relying on me, so I really have nobody to protect through life insurance.

Let’s go over some of the different forms of life insurance that are popular in today’s market:
  • Term Life Insurance – This is basically like an auto policy. You purchase the police for a set period of time. If you die within that period of time, the beneficiary receives the payment.
  • Whole Life Insurance – Basically the same as term, but you purchase a policy that covers you for the rest of your life.
  • Universal and Variable Life Insurance – A more complex form that allows you to choose an investment and sometimes the investment vehicles. These differ from company to company, so make sure you get the details from your agent.
The cost of your premium is essentially determined by your risk of dieing during the policy term and the amount the beneficiary receives if you die. Here are some factors used by the insurance companies:
  • Age – Obviously, the older you are, the higher risk you are and thus the more expensive your premium will be
  • Current health – If you have recently been diagnosed with a life-threatening condition, be prepared to pay hefty premiums
  • Lifestyle – Poor habits like smoking or drinking will increase your risk and increase your premium
  • Policy value – If you take out a one million dollar insurance police, it will be a lot more expensive than a $100k insurance policy.
So when do you need life insurance? You want to try and figure out what kind of financial burden it would be to your family if you or your spouse died. If you don’t have children and your spouse works, life insurance isn’t as important. If you have a few kids, a mortgage and your spouse doesn’t work so he or she can take care of kids during the day, life insurance is a must.

How much insurance do you need? I have heard several different methods of thought. If you are the only one producing income, maybe enough years' salary until the kids go to college? Maybe just a few years' salary? Maybe even enough to pay off the entire mortgage? There are several ways to go about this, but you need to sit down with your spouse and weigh your options. The more insurance you get, the higher your premium will be. Also, if your spouse stays at home to take care of the kids, don’t think you won’t need life insurance on him or her. Figure out how much it would cost to provide child care for your kids until they are old enough to take care of themselves. This should be the value of your life insurance policy for your stay-at-home spouse.

If you want to explore your life insurance options further you can start by getting some free quotes from these online resources:
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