| By :
John Markus
Life insurance is a critical way to protect the finances of your family if you were to suddenly pass away. Life insurance would pay out money to the beneficiary that you name when you die. Life insurance comes in a variety of forms, and there are benefits and drawbacks to each. Whole life insurance will continue as long as you pay the premiums on a timely basis. It collects a cash value benefit that accrues over time. This means that you can cash the policy in during your life time and receive some amount of your payments back. The interest rate that you receive depends upon which sort of whole life insurance you choose. Whole life usually invests in conservative government financial instruments or bonds, so the cash you would receive when you cash it in would be less. Universal or flexible life usually invests in stocks and mutual funds, so you could receive more money when you cash in the policy, but it depends on market factors. Term life insurance only covers you for a limited period of time - say, 5 years or 15 years. The premium will increase as you age. With whole life insurance, your premiums do not change. When you begin to shop for your life insurance policy, you should remember that insurance should not be viewed as an investment. How much you need depends on your personal situation - including your income and your amount of debts. Some people may only require enough life insurance to cover the funeral expenses. Others may need to have several hundred thousand or a million dollars or more in insurance, if they have significant debts, such as a mortgage. Generally, you should consider 5-10 times as much insurance as your current salary. You can find out plenty of insurance information on line these days. It also is a good idea to get a licensed insurance or financial professional to help you determine how much life insurance is right for your personal situation. It is smart to choose an adviser who does not work for one insurance company. It is preferable to have an agent that sells many different types of life insurance. You might find it helpful to ask your friends about the type of insurance that they bought and how much they purchased. Different people have different needs, but it is good information anyway. You should try to ask people who have bought life insurance in your state, as well. The requirements and premiums in Virginia may be different than Maryland, for example. You also should take a strong look at the financial strength and performance of the insurance company you are considering. You want to make sure that the life insurance company will definitely still be in existence in, say, 30 years, when your family may need the benefits. You can investigate the financial strength of your potential life insurance company. There are many companies out there, such as Moody's and Morningstar, that give out grades and ratings for the financial strength of many companies.
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