Our life is priceless. This is why a lot of people are having a hard time accepting the fact that every person has a value after they died. I am not referring to us being bought like slaves. It is actually computed just for insurance.
What is Life Insurance?
This is the policy that is the basis of stability financially after the breadwinner’s death. This is more of the dependent’s protection for when the owners of that policy suddenly passes away. It is a contract in which the policyholder will appoint a person who will receive a sum of money upon his or her death. The terms depend upon the contract agreed upon the firm and the insured person. A monthly premium is paid to the insurance company. This principal is later paid back by the insurance firm. Sometimes, a terminally ill state of the person may also trigger pay.
How important is a life insurance?
So long as a part of your family is depending on you for their needs, it is good to get insured. People would want to lessen the burden of them being gone, even if it’s just financially. Some parents make sure their children can continue their current lifestyle long after they are gone.
This will protect your family in the following ways:
- Security in your home’s mortgage
- Monetary security for your family
- Cover your retirement savings
To be honest, most of the residents of United States have insurance policies that are far more than what they need. This is because of the insurance representatives that keep telling you that you need to buy a higher plan.
There are a lot of factors that will affect your life insurance calculator. Let us go through with each of them for you to understand it better.
How much will the burial expenses be?
This really depends on your preference. It may range from eight to ten thousand but it is subject to the possible medical expenses and assets taxed
How much is your spouse and dependent’s annual living expenses?
Dependent’s age and the state of living matters lot. Of course if they are living in the city, the calculated cost is bigger than those who live in the rural area.
How long into the future does your income needs to be replaced?
Think of it this way, if you are to continue living, there will also be a time where in your children will not be dependent on your income. Let’s say once your children have already graduated and they are already earning their own money.
Lastly, agents will check the insurance holder’s actuaries.
This is where they compute the person’s value. This is depending on the person’s health state. The companies separate their applicants into four categories:
Preferred Best is the class of those who are very healthy and with no adverse medical past.
Preferred is the term used if they are already under medication and have some family history of illnesses.
Standard group is the most common one used because it is not limited. A person may be classified under “preferred” but if there is a change in risk for the person, the term is altered.
Tobacco is for those who smoke. They are differentiated at a special cluster because of all the known fact that this is a predisposing reason of many diseases.