Life insurance is protection against financial loss in the event of death. It is an insurance company’s promise to pay your beneficiary a certain amount of money to handle expenses you may leave behind and keep your dependents financially stable. Yet, a life insurance policy isn’t a necessity for everyone.

No one knows what’s going to happen in the future, and the point of life insurance is to insure against what you can’t predict. Individuals with children, spouses or other dependents are the ones most likely to benefit from investing in life insurance.

Ask yourself these questions before investing in a life insurance plan:

  • How many people depend on your salary?
    If you answer “none” to this question, you most likely do not need to invest in a life insurance policy. Life insurance is expensive, so if you are single, it is most likely better for you to invest your money elsewhere.
  • How much would your dependents need to survive in the event of your death?
    Deciding on how much money to invest into a life insurance plan is difficult. Before placing money aside for your policy, it’s important to sit down and figure out how much your dependents would need in the event of your death.
  • How long would it take for your dependents to become self-sufficient?
    Does your spouse have a job? How old are your children? Trying to figure out how long your life insurance policy will last for your family can be daunting. Be realistic about the amount of time it would take for your family to get back on their feet.

There are two types of life insurance: term and permanent, or whole. Term life insurance eventually expires, whereas permanent or whole life insurance is with you throughout your life. Before you decide to invest in a life insurance policy, do your research, shop around and make sure you have the right coverage for you and your family.

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