Basics Of LIfe Insurance

The aim of this site is to improve public understanding of insurance - what it does and how it works. With the aid of research and information from the INSURANCE INFORMATION INSTITUTE who has provided definitive insurance information to the public, and is recognized by the media, governments, regulatory organizations and universities, we are committed to provide the primary source of information, analysis and referral concerning insurance. Each year, the I.I.I. works on more than 3,700 news stories, handles more than 6,000 requests for information and answers nearly 50,000 questions from consumers. In addition to direct contact with the media, individuals and organizations, the I.I.I. publishes a host of helpful pamphlets and books ranging in subjects from 9 Ways to Lower Your Auto Insurance Costs to the I.I.I. Fact Book. The Institute does not lobby. Its central function is to provide accurate and timely information on insurance subjects. Read and update your knowledge of insurance on here. LIFE INSURANCE: LEARN ABOUT LIFE INSURANCE If you have dependents or other people with whom you share your life, life insurance can play a vital and valuable role at virtually every stage of your life. This site can help you make smart choices when buying life insurance: how much to buy; which type of product to buy; and which one of the hundreds of life insurance companies to choose. LIFE INSURANCE BASICS You may be asking questions such as: Why should I buy life insurance? How much life insurance do I need? What are the Principal types of life insurance? How is life insurance sold? What is a beneficiary? These you will know. Why should I buy life insurance? Many financial experts consider life insurance to be the cornerstone of sound financial planning. It can be an important tool in the following situations: Replace income for dependents If people depend on your income, life insurance can replace that income for them if you die. The most commonly recognized case of this is parents with young children. However, it can also apply to couples in which the survivor would be financially stricken by the income lost through the death of a partner, and to dependent adults, such as parents, siblings or adult children who continue to rely on you financially. Insurance to replace your income can be especially useful if the government- or employer-sponsored benefits of your surviving spouse or domestic partner will be reduced after your death. Pay final expenses Life insurance can pay your funeral and burial costs, probate and other estate administration costs, debts and medical expenses not covered by health insurance. Create an inheritance for your heirs Even if you have no other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries. Pay federal “death” taxes and state “death” taxes Life insurance benefits can pay estate taxes so that your heirs will not have to liquidate other assets or take a smaller inheritance. Changes in the federal “death” tax rules between now and January 1, 2011 will likely lessen the impact of this tax on some people, but some states are offsetting those federal decreases with increases in their state-level “death” taxes. Make significant charitable contributions By making a charity the beneficiary of your life insurance, you can make a much larger contribution than if you donated the cash equivalent of the policy’s premiums. Create a source of savings Some types of life insurance create a cash value that, if not paid out as a death benefit, can be borrowed or withdrawn on the owner’s request. Since most people make paying their life insurance policy premiums a high priority, buying a cash-value type policy can create a kind of “forced” savings plan. Furthermore, the interest credited is tax deferred (and tax exempt if the money is paid as a death claim). How Much Life Insurance Do I need?...