What is life insurance?

The broad consensus among consumers is to keep expenses down, so you tend to avoid all wasteful products. But when it comes to the safety and security of your family and buying insurance you wonder do I really need it and what is life insurance?

In simple terms, life insurance is basic financial protection. Given the diversity of families and circumstances, there are various types of options. For example, take term life insurance. The role of a term life policy is to provide a lump sum of money (the "death benefit") in the event of your death that will help your family:

Your values and needs are not the same as those of your neighbours. This is why there are different types of policies for different types of people. So how do you choose? There are three strategies for buying a policy:

  1. Evaluate the amount of insurance needed. Most people are under-insured and need a boost in coverage. The number one question you should ask is how much financial support would your family need after you're gone
  2. Opt for a cash value or term-life policy. Term-life policies provide coverage for a certain period of time, but a cash value policy will continue for the rest of your life, no matter how long you live. Your typical term life policy covers you for 10, 20, or 30 years.
  3. Ask about broader issues, like what is life insurance that covers disability. Besides death and dependents, you should also consider if you could pay your bills if you were unable to work for a long period of time. With additional expenses, due to your disability and a decrease in income if you cannot work translates into an inescapable financial toll that could become worse.

There are many variations in insurance and choosing a particular policy really depends on your personal situation, so it's best to consult with a professional who can help you narrow down the choices.