life insurance

If you’re a homeowner, you have insurance for your house. If you have a car, you’ve got insurance for that too. And, if you’re like me, and you’ve got a life, and it’s the only one you’ve got, it might be a good idea to look into insuring that too. Life insurance is one of those policies that you buy for the benefit of others in your life, not yourself. There are different policies available to buy, and you can ask any life insurance company about their products, but as a general rule of thumb, life insurance pays out when you die, plain and simple.

How It Works

When you buy life insurance, typically a representative of the insurance company will either ask for access to your medical records or come to your house to draw blood, weigh you and generally assess your health. Since insurance companies calculate risk, they have to determine what it will cost them to insure you for the amount of coverage you’d like. If you’re in great shape, you’re likely to get a better monthly rate because you’re healthy in the eyes of the insurance company. You’ll live longer, and as a result, you’ll be able to pay more into your policy over the long term. If you’re in poor shape, the opposite is true. You’re at a higher risk of not being able to pay into your policy over the long term, and therefore your monthly premium will be higher. Additionally, you’ll be asked to choose a beneficiary. A beneficiary is the person or persons who receive the tax-free cash payout of your policy when you pass away. Typically, beneficiaries are your children or family who are most closely associated with your wellbeing.

Yes? No? Depend-ents.

Everyone will die. Sorry to just lay it out there, but it’s a fact. And because of that fact, there are certain inevitable expenses that are sure to come along. Life insurance can cover expenses like funeral and medical costs, but it can also cover much more than that, too. As a parent of a child or children, you’re buying life insurance to cover everything you might financially contribute to the family in your absence. Associated costs might include mortgage or rent or college tuition. You might even consider money you’d dedicate to your son’s or daughter’s wedding down the road. As a parent of grown children, you’re buying life insurance to cover everything you might need to settle any debts and costs that arise from your passing. Whether it’s money for medical bills, funeral expenses, outstanding credit card debt or even money to pay off the principle of your home, life insurance can cover it all.

What Do I Buy?

Rebecca Webber from Real Simple has a quick summary of what you should buy for different situations.   “Consider buying a policy with a payout that’s large enough to cover your mortgage principle. If you have young children, make sure it also covers the cost of college tuition. Opt for term life insurance, which charges a fixed annual premium over a predetermined time frame, rather than a whole life policy, which includes an investment component (a portion of the policy is held in an investment portfolio) and whose premium can be about 10 times the price of comparable coverage.”   She also suggests signing up for the longest term possible to save money on your rate. Another money-saving tip is to buy a policy with a renewable level premium. With a renewable level premium, your cost won’t increase from one year to the next after the age of 35.

You’re Paying for Peace of Mind

When you consider what life insurance is intended for, one might consider the whole concept pretty morbid. I mean, some go so far as to call it “death insurance.” In fact, it’s anything but. Think of it this way: A life insurance policy is a gift. Very nearly the best gift you could ever give a loved one.

Life Insurance Terms

When you’re shopping for life insurance, you might run into some unfamiliar terms. We put together a little glossary to help you educate yourself.


A policy is the product, or package, available for sale from the insurance company.


The term is the length of the policy.


Your rate is the monthly cost associated with carrying a policy. This is also called a premium.


Coverage refers to the specific benefits you receive from a policy.


The beneficiary is the person who receives the insurance payout when you die.


A dependent is a person who depends on you for care. This can be your kids or an adult, as long as their wellbeing depends on the care you provide.

Life Assurance

Let’s face it. Nobody wants to talk about death, but a life insurance policy doesn’t necessarily refer to the end of a life. If you look at it from the perspective of the lives of the people that you leave behind, you’re ensuring that their lives will go on without worry. And what could be a better gift than that?

Do you have any experience buying life insurance? Have you ever been a beneficiary? Would you buy it for your kids? Share your life insurance story in the comments below.



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