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Which life insurance policy should you buy? You will at some time in your life come to the conclusion that you need to buy some life insurance. You have a pretty good idea how much you need but deciding which life insurance policy is best for your particular need is another question. There are many to choose from. May be if we examine the varying reasons why people buy life insurance and which policy best fits a particular need you would more easily come to a decision. Here goes.
Mortgage Life Insurance Protection.
Most people have a desire to own a house at some time. Some are small and cozy and seem to just ooze family. Others are larger and may seem to project affluence and success. One thing they all seem to have in common is that this piece of property is very important to it's owners. Sometimes it is simply pride of ownership that drives a person to buy a house. In other situations this home is bought because the couple may just want a home for the family. They want their children to know that this is their home.
You buy homeowners insurance to protect your home in case of fire or any type of disaster that may destroy it. You also need to buy some mortgage life insurance in the event of the death of the person who pays the mortgage. One of the best policies to use is the decreasing term life insurance policy. You buy this policy for the duration of the mortgage...for example 20 years. Upon your death the insurance company pays your beneficiary an amount equal to the balance owed...
They therefore have a house free and clear. Some people prefer to use, for our example, a 20 year level term life insurance policy. If you died in the first year the same amount would be paid to your beneficiary but if you should die for example in year ten there would be sufficient money to pay off the mortgage but there would be considerably more cash that your loved ones would certainly welcome.
Family Protection.
One of the main reasons for buying a life insurance policy is for the protection of your family in case you should prematurely die. They will need money to pay last expenses like burial costs, probate costs, attorneys fees and of course the big one...estate taxes. Although the congress has repealed the estate tax it has been done on somewhat of a sliding scale until the year 2010...so the fact is that if you are in that tax bracket you have estate taxes to pay upon death.
You also must consider that your family still needs your income after your death. You need a policy the proceeds of which can be paid out in the form of an income. The best way to do these things is to buy a life insurance policy to take care of the cash needs and another life insurance policy that would provide income at your death. In either case the most commonly used policies are the 20 year term life, the 25 year term life or the 30 year term life insurance policies.
Some people like universal life insurance, variable life insurance, variable universal life insurance or whole life insurance. These life insurance policies include cash values which you could use during your lifetime.
Business Life Insurance Needs.
Small business owners needs for life insurance policies differ from individual need or family protection needs even though the focus still is in the surviving family. A corporation or a business partnership would buy a life insurance policy on each of the partners or stock holders that would provide sufficient cash to buy a deceased partners or stock holders shares from his or her heirs. A buy sell agreement is drawn up by an attorney. It is funded by life insurance and is binding. Most business people use 20 year term life insurance policy or the 30 year term life insurance policy for this. Any of the permanent cash value policies can also be used.
Business owners may also buy life insurance to protect the business against the loss of a valuable key employee. The business would own the policy and also be the beneficiary. Upon the death of the key employee the cash from the life insurance policy would be used to help the business stay afloat while they search for a capable replacement.
If we are financially ready to fight against all the consequences which we might have to face in life, then we can relax and understand that the regular time our gives our perspective to make better judgments. Learning to go with the flow brings in new productive results. It is always a welcome resolution if we take accurate decisions at time then we can relax mentally. Investing in any of the life insurance policies will give us not only mental relaxation but also financial relaxation. If we visualize our future before any untoward incident takes place then we can tackle the situation cleverly because the assistance of the life insurance policy is there with us to help us. Setting the goals and getting to work as soon as possible and extending a helping hand towards our selves are very important in life. As a head of the family it is our sole responsibility that we have to take care of the needs of all the family members. Obviously when we work hard we wouldn't like to spend money lavishly and we would also consider that we should have the finances and comforts through out our life. Yes, this is possible if only we invest in any of the life insurance policy and then everything is set right in its place.
My sister in law was forced to move out of the house to work after my brother's unfortunate death. Everything was perfect in their life, when one day my brother's sad news came to us that he had lost his life in a road accident. He was killed on the spot before he could get any first aid. My sister in law was depressed but nevertheless she could not neglect my brother's business and she had to take care of all the responsibilities all alone without anyone's help. Fortunately my brother had invested in the whole life insurance policy. Due to my brother's untimely death, my sister in law could not attend the business for some time thus it was been neglected and then again it took some time to get back into the flow. Anyhow because my brother had invested in the whole term life insurance policy, my sister in law was less stressed and she could take their help whenever she needed. She was at least satisfied that she and my nephew who was just 8 years old then were financially secured for their future. All his educational expenses were being attended by the life insurance policy because it took quite a lot time for my sister in law to understand my brother's business. Gradually when everything was set back on the right track and my sister in law also was well settled in the business then she could also concentrate more better on the business and after a few years my nephew took the charge of the business and my sister in laws happy that her husband had taken the right decision on the right time and that she did not had to suffer much because of the finances.