Many people need life insurance. The only ones who don’t need life insurance are those who have no debt and no dependants.
Life insurance is insurance that pays proceeds to family or dependants upon the death of the person or persons covered. A life insurance policy is a contract between the insured and the insurance company. The insurance company agrees to pay a sum of money to the insured's beneficiary. Premiums (monthly payments) must be kept current.
People take out life insurance policies for many reasons. Life insurance is security for family members. If the major wage earner in the family dies, there is a death benefit that will help family in overcoming any financial burden. Life insurance is a legal contract. The contract details:
* How much money the policy is worth
* How much the premium is ( monthly payment )
* How long the policy is for ( anywhere from 10 years to life )
Life insurance is essentially a tax-free death benefit.
Other uses for life insurance:
* Defer paying tax on the money one makes investing cash savings. Having life insurance is the only way one can do this, unless one has an RRSP.
* Family can use the death benefit to pay any debt, outstanding taxes and funeral costs
* Life insurance in a business relationship is a good idea, including having life insurance policies between business partners
Life insurance policies are useful when borrowing money. Permanent life insurance, allows one to grow cash value, then borrow money when one needs it. One can borrow from a bank using the life policy as collateral.
Not just for the old
Young people should consider buying a term life insurance policy. It is more flexible available in terms of policy options. Young people can get longer coverage terms at lower rates than older buyers, since they're less of a risk. If a younger person buys a policy by choosing term policy (a set amount of time), the young person ensures that the plan will have value when they need it, without them having to pay huge policy premiums.