individual Insurance

Individual Life Insurance

Written by David Sinatra

Individual live insurance is important if you work and others depend on your income. In case of a death the insurance can pay for the bills and whatever else you may have been paying for while you where alive. This is not the sole reason for having life insurance. There are several other reasons such as: This can be another savings account. Some but not all have a cash value and if not used for death benefits can be used to borrow against or can be removed or withdrawn at the policyholder’s request. Also, the interest collected is tax deferred making it that much better of a plan. Making charitable contributions can help push your individual life insurance policy along. By doing this a policyholder can add in much larger contributions. Make an inheritance for your special heirs- Even if there is nothing left to give them if you die you can always name them as the beneficiaries. This way they are guaranteed to get the amount of the policy. Use the individual life insurance policy to pay for final expenses. This will relieve the family members of the huge burden of your burial and funeral expenses. There are two types of individual life insurance: Term- this is the easiest simplest type of life insurance. The term insurance will only pay if the death occurs while the policy is still in its term or active. The term level insurance means the benefits stay exactly the same through the life of the policy. The term decreasing means the benefits drop throughout the life of the policy. “In the year 2003, 97 percent of all individual life insurance policies taken out were for level term” as quoted by The Insurance Information Institute. Since then the rate has not changed enough to research it thoroughly again. Individual life insurance is a legal agreement between the policyholder and the insurance company. And the policyholder must always remember this if issues arise. Many are taking out these policies so that their loved ones will be taken care of financially if something was to happen suddenly. If an individual is debating if they should have a policy then the question is what would happen to your family if you were to unexpectedly die tomorrow? Many cannot answer this question without realizing that their loved ones would be struggling. If an individual is employed and has group life insurance this is very different from individual insurance. Whether you work as part of an association or union you will still not be given much option over the type of policy that you have. Whereas with individual life insurance you have complete control over the type of insurance, the amount and how long the policy is good for. Many individuals like the idea of making their own decisions should something happen and they need to have their families financially taken care of. Also, if you have group life insurance in most cases this will be cancelled if you leave the employer. There have been instances where the employer that was left does not inform the former employee which means there is no life insurance policy should something happen. When investing in a individual life insurance policy you make the decision of how much money that will be paid out at the time of your death. And you choose who will receive the money at this time. You name the individuals so that you know exactly where your money will be going. These individuals are also known as “beneficiaries”. You will probably be given the choice of whether the money gets paid out all in one lump sum or broken down to payments. Many are uncomfortable with the lump sum if the person chosen to handle the money is not that financially savvy. Some individuals will get a lump sum and spend it too fast. What this individual life insurance policy does is create security financially wise for the families that will be left behind. If you are married and have children the idea is to have enough money on the policy to lessen the financial burden if something should happen to you. Many families have the expenses of car loans, mortgages and children in college. If you become ill you will also want to make sure there is enough money to pay any outstanding hospital bills and funeral expenses. To help figure out what policy would be best for you and your family many experts say to make a list of assets. If this is done you list all the assets your family would have if you were not there right at the moment. What would they need for the basics such as food and clothing? Do not forget to add in members in the household that could be working and are not at the moment. Checking and savings accounts balances will also need to be added in. Then add in the bills that are your normal monthly expenses. After this you will have a better idea of what will actually be needed. Of course if you are married and your spouse works fulltime also the expenses may be less.

 

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