Throughout your life you always have your family’s need in mind.  You work very hard to make sure that there is food on the table, the kids are able to go to school, they have a roof over their heads, and you have extra cash to spend for out of town vacations.  But what will happen if by a twist of fate, you are taken away from your family?

Life insurance allows your family to continue living the life that you have worked very hard to provide for them.  The passing of a family’s breadwinner can be financially crippling to the one’s he will leave behind and life insurance helps you secure your family’s future once your financial support is gone.  It provides funds that will help them get back on their feet and face life on their own.

Make a proper estimate of your life insurance needs

More often than not, policyholders debate whether they are leaving too much or too little for the family.  Compute the things that you need to pay off like your mortgage, debts, education for the kids, car payments, and other expenses that your family may have.  Using this figure you can now estimate how much coverage would be enough to provide their immediate needs in your passing.  As a general rule, the amount that you leave your beneficiaries should be about 7 times your annual salary.

It is also ideal to recalculate the needs of the family against your current coverage every year that the policy is in force as our needs change constantly.  You will never know when you will need your life insurance, so it is best to update your coverage.  This ensures that all of your family’s needs are met in the event of your death.

Types of life insurance that can protect your family

There are a number of options that insurance companies offer to protect your family in the event of your unexpected death.  Although they may add some features to the policies, the most basic type of life insurance are listed below:

  • Term Insurance is a type of life insurance that covers you only for a certain period.  The coverage of a term insurance is usually from 1 to 30 years.  Some term insurance offers the option of renewal in case you want to lengthen the duration of your coverage.  In term insurance, your family will receive the sum stated in the policy when you die within the period stated in the insurance policy.  This amount will be very helpful with any immediate expenses they may have during your death and can provide the financial assistance that they need as they adjust to living without your financial support.
  • Permanent Insurance is a type of life insurance that will cover you until your time of death and has no specified period covered.  It is very common for these types of insurance policies to earn cash value while it is in force and this can either be withdrawn or loaned while you are alive to use for your unexpected expenses or added to the total lump sum amount that your family is supposed to receive when you die.