"Why is life insurance so important? Because it is one of the few financial products that can solve a future problem easily. The core concept is simple: You agree to pay a certain amount of money to an insurance company (the premium), and in exchange, the company will pay out a lump sum or sometimes a stream of payments (a death benefit) to your designated beneficiaries in the event of your death."
"One quick way to determine if you do, is to ask yourself a basic question: If I were to die now, would anyone suffer financially? Beyond family, if you own a small business or if a large portion of your net worth is tied up in an illiquid asset (think real estate), you may need coverage. If you are the primary caretaker of your child, and your spouse is the money maker, insurance can cover the childcare that you provide."
"The cost of life insurance depends on your age, your health, the type of policy you choose, and how much insurance you buy. To determine the amount, think about what you would like to cover in the future. In addition to setting aside money for the funeral and ongoing living expenses, do you want to plan to pay off an existing mortgage or car loan and do you want to fund future expenses like college costs for kids or a surviving spouse's retirement needs?"
Life insurance provides a death benefit to designated beneficiaries in exchange for paid premiums, solving future financial problems for dependents. Determine need by asking whether anyone would suffer financially if death occurred now; needs include family dependents, small business obligations, or illiquid assets like real estate. Coverage amount should cover funeral costs, ongoing living expenses, outstanding debts such as mortgages or car loans, and future obligations like college or a surviving spouse's retirement. Costs vary with age, health, policy type, and coverage amount. Use a free online calculator to estimate required coverage and then select an appropriate policy.
Read at The Mercury News
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