Life

The goal of life insurance is to provide a measure of financial security for your family after you die. So, before purchasing a life insurance policy, you should consider your financial situation and the standard of living you want to maintain for your dependents or survivors.

Life insurance can help:

• Replace income your family would need to maintain their standard living.
• Pay off your mortgage or other personal and business debts.
• Create an education fund for your children.
• Pay final expenses, such as funeral costs or medical bills.
• Create a family emergency fund.
• Protect future insurability. No matter what your future health, your policy will stay in force as long as premiums are paid.
• Build cash values on a tax-favored basis in permanent life insurance plans. When the policy is properly funded, these cash values can be borrowed through policy loans.

There are many different types of life insurance policies, but the two most popular types are term life and permanent life. Term life insurance generally provides protection for a set period of time. Permanent insurance, such as whole or universal life, provides lifetime coverage. It's important to match your life insurance to your specific needs and goals.

Insurers use rate classes or risk-related categories to determine your premiums. These categories don't, however, affect the length or amount of coverage. Your rate class is determined by a number of factors, including overall health, family medical history, and your lifestyle. Tobacco use, for example, would increase risk and therefore cause your premium to be higher than that of someone who doesn't smoke.

It is prudent to re-evaluate your life insurance policies every few years, or when you experience a major life event like marriage, divorce, the birth or adoption of a child, or purchase of a major item such as a house or business.