5 Frequently Asked Questions about Life Insurance
Simply put, a life insurance policy protects your dependents after your demise. It can help your spouse meet their financial needs such as payment of your children's education.
Here are some frequently asked questions about life insurance including whole life and term life insurance.
Here are some frequently asked questions about life insurance including whole life and term life insurance.
“Frequently Asked Questions about Life Insurance”
Life Insurance FAQs
Following are some life insurance FAQs:
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What should I consider while purchasing a life insurance policy?
You need to ensure that you get enough coverage. It is not wise to compromise on this front. The things you should consider for determining the coverage are your present income, your future earning capacity, number of dependents, your debts (like mortgages) and critical future needs (like the cost of children's education).
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What can life insurance be used for?
Life insurance can be used for the following purposes:
- To pay the deceased's last outstanding dues, such as medical bills and funeral expenses
- To provide income for life to the spouse or income till the children complete their education
- To pay for retirement
- To pay off a mortgage
- To cover taxes and expenses related to inheriting an estate
- To pay for children's education
- The interest can be withdrawn to finance some special purpose, like a wedding of a child
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How is the cost of life insurance determined?
The cost of life insurance is calculated based on the following:
- Mortality - The older you get, the higher is the premium due
- Interest - The estimated interest that can be earned from investing the insurer's money by the insurance company into stocks, bonds, real estate and other investment tools.
- Expense - This refers to the expenses of running the insurance company. This could include expenses such as salaries and legal fees. The amount charged by the insurance company is called expense loading, which varies depending on how efficiently the insurance company is managed.
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Should I buy life insurance through my employer?
Well, there is no straightforward rule for this. The advantage of buying through your employer is that the life insurance becomes cheaper and less complex. The disadvantage is that the policy may not be customized to your specific needs.
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I am single. Do I need life insurance?
Yes. Even if you are single, you could need life insurance. If you have a dependent parent or grandparent, you need a life insurance policy. You need one also if you have taken a joint loan or mortgage. Moreover, it is best to take a policy when you are young and healthy. So, it is not a good idea to wait till you get married or have children. If you have a family history of any condition, like heart disease, cancer and diabetes, you should consider taking a life insurance policy.
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jpowell31
Feb 13, 2011 @ 8:48 pm | delete
- Many of us will at some stage in our lives have the need for life insurance. Life insurance is a great way to give to charity when you die. You may have always had a great philanthropic desire, but not the means to make it a reality. Life insurance can do that for you. This is an outstanding resource. Thanks so much for sharing. This is one of the best summaries I've seen. nice lens!
Josh
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- My best choice insurance is the one that could cover the most policies at cheap cost.
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