Life Insurance 101
You’ve probably heard of life insurance by now. But if you are reading this, you are probably hoping to learn more about life insurance, what it all means, what you need to know before you enroll for a life insurance policy. You may have questions like, why do I need this type of insurance? What does this type of insurance cover?
What is it?
Life insurance is a type of policy that pays out a set sum of money either immediately after a person dies or a short period after that person’s death. This money usually goes to the spouse and/or children of the deceased individual. So, life insurance is essentially coverage for those left behind following the death of the policy holder.
What is the difference between permanent and term life insurance?
Permanent life insurance is coverage that remains in place until the policy holder passes away. Meanwhile, term insurance only covers you for a certain period of time, like 10 to 20 years. Term policy rates tend to be lower than those of permanent rates, so most people choose term policies instead. Permanent policies can grow, however, with a savings component known as a “cash value” of the policy that can increase over time.
How much coverage do I need?
Typically, it is recommended that you get a policy that is at least six to ten times your job salary. So if you are making $50,000 per year at your job, you would take out a policy of at least $500,000. This policy would need to last at least 15 to 20 years.
How much does life insurance cost?
These policies typically cost $26-$55 a month. This is the average rate for these types of policies. However, this cost usually varies depending on the type of coverage you need–whether it is term or permanent, and the amount you opt in for.
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