Life Insurance – Don’t be Caught Without it

Remember this number: $6,500

Why do you need to remember this? Well, it is because this is the average funeral cost in the United States. The average funeral cost consist of the minimum because such things as the burial plot, floral arrangements, and even a vault are not included. When all of these important items are included, the cost is more like $10,000.

Now remember this statistic: In 2006, it cost 95% more to bury a loved one than it did in 1998. This constitutes why a life insurance policy is necessary. If you don’t have a life insurance policy, then the burden is on your family to come up with your burial cost and this can be stressful for them. They could possibly be financially devastated in the event of your death. What a life insurance policy does is replace the income your family has lost due to your death and also pays for your burial costs so that your family doesn’t have to worry. Even if you are not a significant financial contributor, the funeral services have to be paid for somehow.

Two Types of Life Insurance

There are two main types of life insurance: Term Life and Permanent Life. There are significant differences between these two policies that you must know so that you receive quotes and apply for the right insurance policy. Here are brief explanations of both:

• Term Life – With term life insurance, you are only protected for a certain period of time. For instance, you are only protected for anywhere between 10 and 30 years. If you die while the policy is in effect, a death benefit is paid to your beneficiaries. If you’re still alive at the end of the policy term, you are no longer covered unless you renew the policy and not necessarily at the same low rate as before.

Term life insurance is best for those who want to supplement an existing policy. People do this when they have taken on further financial obligations. Term life is basically an easy way to get a large amount of life insurance protection for a small amount of money. However, your premiums will go up as you age, which can make the policy expensive later on.

• Permanent Life – With permanent life insurance, you are given protection for your lifetime. Your premiums always stay the same and your policy is able to gain dividends over time, meaning it gains cash value. This is done by investing with your policy. Although the premiums may be higher than term life insurance, permanent life is inevitably cheaper because the premiums always stay the same. Many choose this type of coverage for the investment factor as well as having permanent coverage that never changes in cost.