09 / 12 / 2012

Do you need life insurance?

I recently took a course in Life Insurance and since I had a baby 3 months ago, I started thinking – what if something happens to me- how would my husband survive if he had to take care of my daughter and earn a living, pay for the mortgage and for the babysitter? It’s not easy doing it alone.

So – life insurance is an interesting animal. There are several different kinds and you can find affordable coverage even on a small budget.

There are 2 basic kinds: Term and Perm – that is Term and Permanent Life.

The basic distinction is that Term is a cheaper kind and pays out on death as long as you pay the premium. Once you stop paying the premium – you are no longer covered. It is a rather cheap option – and one can get a plan at $15-20 a month. If you can be covered at work – by all means sign up.

Permanent insurance is a more expensive option, however, it accumulates cash value and there are various things you can do with this cash value. On average, it takes 17-20 years of paying the premiums for the policy to be able to sustain itself – that is, you no longer have to pay premiums but will still be covered. Also, you can borrow against the policy’s cash value when you have to. You can terminate the policy and “cash out” when you think you no longer need a policy.

In any case, if you have someone to protect, you should consider life insurance policy – especially if you have nobody to count on.


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