It may seem morbid to think about death even though it can't be avoided. The uncertainty of when it will happen worries many and that's where life insurance can help. Life insurance is like a safety net for you and your family.
"Life insurance is a type of contract that's a unilateral contract between a company and an individual that insures a person's life whether they were to die unexpectedly or at some point in time will provide a benefit to their heirs or beneficiaries," Barry K. Malone said.
Malone, a financial advisor, said it's not that complicated.
"People often ask what's the best insurance to have," Malone said. "Well the best one to own is the one that's enforced when you die."
You should pick a contract based on your needs.
"Permanent insurance is those things you want to provide for longevity. Whether it's for replacement income to the spouse, to the family. For heirs for legacy purposes for charity. It's something that you want to last forever and that's permanent forms of insurance which would be like whole life, universal life, or variable life," Malone said. "The primary type is called term insurance and it's some form of permanent insurance. Term insurance is basically renting coverage. It lasts for a period or term of years."
Some contracts can even work as savings accounts.
"Whole life is a contract that's written by an insurance company that has a specific guarantee, if you pay this premium we'll pay this death benefit and we will accumulate that premium that has a value inside that contract that if at some time you need money or have to borrow money it acts as a savings vehicle," Malone said.
You've just got to make sure you've got all your bases covered in your contract.
"Normally you'd want to add up all your debt and at least buy enough life insurance to cover all your debt and have enough to pay for your funeral costs," Malone said. "If you have people you're responsible for you want to have enough capital left over to replace that income for a period of time or for a very long period of time."
