by Margie Coghill

Life insurance is a valuable resource to have and can give you the peace of mind that your family members and loved ones are financially protected. Buying life insurance is a financial decision and an emotional decision. Do you have family members that depend on you financially? Would they have enough money to pay for your funeral, mortgage or debt that you leave behind?

Term life insurance is purchased to help give people the protection that they need when they can’t afford to buy permanent life insurance or when they only need coverage for a specific period of time. Term policies are similar to other insurance policies you may carry, such as car insurance. You pay monthly for a term life insurance policy in case something bad happens, such as an untimely death. A death benefit is paid if the insured dies during the time period specified. Many term insurance policies offer level premiums for the life of the policy and can be purchased for 10, 15, 20 or 30 years.

The cost of life insurance varies and is calculated by the age, health, family medical history and life expectancy of the insured. Most insurance companies require an in-depth medical interview with the person acquiring the policy and they must submit to a physical by an insurance company doctor.

Permanent life insurance, otherwise known as Whole Life Insurance, is protection for your whole life. It is a lifelong policy that builds cash value that you can borrow against. For example, you might choose to borrow against the cash value to make a down payment on a house or pay for college tuition. Any outstanding loans taken against the policy at the time of death are deducted from the death benefit at the time of the claim. The policy could be terminated if the loan value grows too large for the cash value to support it. Your premiums won’t increase due to aging or health changes.

There are additional components called riders that can be added to your permanent life insurance policy.

  •  A waiver of premium rider keeps your policy intact if you become disabled and can no longer afford to pay the premium.
  •  Accidental death and dismemberment offers an additional death benefit to your beneficiary if you die in an accident or get dismembered while you are still alive.
  • Critical illness benefit rider provides early access for the treatment of a certain illness.
  • Child rider provides a benefit for expenses in the event of a child’s untimely death.
  • Term conversion allows you to convert your term policy into a permanent policy and the end of the term. For example, if your term policy ends in 10 years, you may want to convert it to a permanent policy.

How much life insurance should you carry? A good rule to follow is purchasing a policy 10- 15 times your income, but it depends on your financial circumstances. You should consider your credit card debt, mortgage, auto loan and college tuition when determining how much life insurance you will need.

Purchasing life insurance gives you peace of mind knowing that you are protecting your loved ones in their time of need from financial debt.